Nigerian SEC Proposes Significant Fee Hikes Amid Surge in Cryptocurrency Economy
Summary:
The Nigerian Securities Exchange Commission (SEC) has proposed a modification to the regulations governing cryptocurrency services platforms. This includes a dramatic increase in registration fees for crypto exchanges, a substantial hike in processing fees, and a potentially prohibitively high paid-up capital requirement. Critiques have been raised about favoring foreign firms over local entities. These changes come amidst Nigeria's surging dominance in the global cryptocurrency economy. The country's significant rise in inflation following the naira trading freely on markets in June 2023 has likely been a contributing factor.
The Nigerian Securities Exchange Commission (SEC) has put forth a proposed modification to the regulations overseeing crypto services platforms. This involved suggesting a significant increase in the registration fee for crypto exchanges from $18,620 (30 million naira) to an enhanced $93,000 (150 million naira). The SEC released these proposed amendments intending to give a deeper understanding and integrate feedback from those within the industry, particularly from discussions with the Central Bank of Nigeria (CBN).
Back in May 2022, the initial rules for managing all crypto and digital asset services were established by the Nigerian SEC. However, a recommendation for modifying these rules was released last Friday, March 15, 2024. With the revised guidelines, platforms like digital asset exchanges (DAX), digital asset offering platforms (DAOP), and digital asset custodians (DAC) would have to pay an increased filing/application fee of $186 (300,000 naira), compared to the original fee of $62 (100,000 naira).
The proposed revisions also indicate that the processing fee would jump from $186 (300,000 naira) to a hefty $620 (1 million naira), marking a substantial hike. Likewise, the registration fee has seen a significant 400% increase, rising from $18,620 (30 million naira) to a whopping $93,102 (150 million naira).
Another adjustment put forth renames the “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” as the “Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody.” The SEC explains that these revisions are made to improve transparency and to include feedback from stakeholders in the industry. Moreover, they embody insights obtained from recent interactions with the CBN.
Despite the SEC attributing these proposed changes to stakeholder input, some assert that the $310,343 (500 million naira) paid-up capital requirement is excessively high. The critique lies in the idea that this could give an unfair advantage to overseas firms while serving as a barrier to local companies.
Nigeria has seen a rapid rise as a significant player in the global crypto economy over the recent years, becoming the second-largest economy in terms of crypto adoption in 2023. In recognition of Nigeria's high level of interest in cryptocurrency, Google search data from August 2022 identified the country as having the highest rate of "cryptocurrency" or "buy crypto" searches worldwide.
According to the Financial Times, Nigeria shifted from its long-held currency peg to allow the naira to trade freely in the market in June 2023, leading to unprecedented inflation rates. By January 2024, data from the National Bureau of Statistics indicated that Nigeria's consumer inflation had been climbing consistently for 13 months, reaching nearly 30%.
Published At
3/16/2024 10:58:55 AM
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