SEC grants 'approval-in-principle' to two digital asset exchanges

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The Securities and Exchange Commission (SEC) has granted two digital asset exchanges “approval-in-principle” to commence operation under the Accelerated Regulatory Incubation Programme (ARIP).

This is in furtherance of its commitment to enabling innovation that would deepen the capital market while guaranteeing the protection of investors.

The companies granted approval are Busha Digital Limited and Quidax Technologies Limited.

Disclosing this in a statement in Abuja on Thursday, the Commission said the cohort comprises two digital asset exchanges, four digital asset offering platforms, and one digital asset custodian.

The SEC said, “Busha operates a digital exchange that facilitates the buying and selling of crypto assets with fiat currency.

“It enables individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services.

“Busha’s customers use mobile and web applications to buy, sell, store, send, receive, trade, invest, and make payments in cryptocurrencies.

“Quidax Technologies Limited operates a cryptocurrency trading platform in Nigeria. The platform leverages blockchain technology to list and trade already issued crypto tokens (assets).

“The services are provided via a proprietary blockchain owned and controlled by Quidax. The exchange platform is both web and mobile-enabled for ease of access and use.

“Quidax also utilises a digital wallet to enable its users to store, receive, and transact in a variety of cryptocurrencies.”.

Similarly, five firms have been admitted to test their models and technology under the SEC’s Regulatory Incubation Programme (RI).

They are Trovotech Ltd, Wrapped CBDC Ltd, HousingExhange.NG Ltd, Dream City Capital and Blockvault Custodian Ltd.

The SEC recently introduced the ARIP to strategically onboard firms that had commenced operations prior to the release of the Rules on Virtual Asset Service Providers in May 2022.

Conversely, the RI Programme was created to assess the business models of digital asset firms and test innovative products, services, and technology in a real-time market environment under close supervision by the SEC.

According to the Commission, “Specifically, the current cohort of the ARIP and the RI Programme is characterised by the increased use of distributed ledger technology (“DLT”) in creating and trading crypto assets The outcome of the process would inform further policy development in this space.

“Tests would be conducted on a short-term and small-scale basis, and the SEC would continue to work with the participating firms to agree on testing parameters as well as robust consumer safeguards.

“The referenced Approvals-in-Principle are a precursor to the grant of full registration by the SEC and are meant to ensure that appropriate protection and transparency are in place in respect of each product or service.”.

“It is noteworthy that the above firms are not the only entities that have applied to ARIP and the RI Programme. Other applications received are being assessed and will be granted approval-in-principle on a case-by-case basis as they meet all SEC requirements.

“The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorised to carry out the business of crypto trading in any form in Nigeria.

“In this regard, the ARIP and RI remain the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian capital market,” the SEC further stated.

The Commission therefore strongly advised the public to refrain from dealing with illegal operators who have not applied to and received the SEC’s approval under the ARIP or the RI Programme.

“Intending investors are also reminded to always confirm from the various SEC information portals whether entities purporting to provide investment services are legally empowered to so do,” the SEC added.

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