Quidax Becomes Nigeria’s First SEC-Approved Crypto Exchange – What It Means for the Industry

Quidax Breaks Ground with Provisional Operating License

In a landmark development for Nigeria's crypto landscape, Quidax has become the first exchange in the country to receive a provisional operating licence from the Nigerian Securities and Exchange Commission (SEC).

This significant regulatory milestone marks the beginning of formal recognition and oversight for Nigeria’s burgeoning digital asset industry.

The SEC’s licensing, which follows a comprehensive overhaul of its regulatory framework, now authorises Quidax to operate as a registered crypto exchange within Nigeria.

According to the press release, this provisional licence is seen as a “shot of adrenaline” for the Nigerian crypto community.

Buchi Okoro, Quidax’s co-founder and CEO, expressed his enthusiasm, stating that the SEC’s approval is expected to stimulate further innovation and expansion within the local crypto sector.

He praised the SEC, particularly under the leadership of Emomotimi Agama, for its decisive steps in fostering order, confidence, and investor protection in the Nigerian crypto ecosystem.

This regulatory endorsement now paves the way for Quidax to collaborate with banks and financial institutions, contingent on approval from the Central Bank of Nigeria.

Regulatory Milestones and Industry Impact

The SEC’s move is part of a broader regulatory overhaul that was initiated on 21 June.

This overhaul included amendments to rules governing digital asset issuance, offering platforms, exchanges, and custody.

A notable addition to this regulatory reform is the Accelerated Regulatory Incubation Programme, designed to assist virtual asset service providers in aligning with new regulatory standards.

Despite these advancements, concerns were raised that stringent licensing requirements might reduce the number of local crypto exchanges.

The SEC mandates a minimum upfront capital requirement of 500 million naira ($556,620) and a Fidelity Insurance Bond covering at least 25% of this minimum paid-up capital for digital asset exchanges and offering platforms.

Nigeria’s Crypto Adoption and Regulatory Challenges

Nigeria, Africa’s largest economy, has consistently ranked high in global cryptocurrency adoption.

A recent survey of 15 countries highlighted Nigeria as having the world’s most cryptocurrency-aware population.

Chainalysis’ “2023 Cryptocurrency Geography Report” ranked Nigeria second in crypto adoption among 154 countries, showcasing its pivotal role in the global digital asset ecosystem.

However, despite high adoption rates, anticipated foreign crypto investment has not fully materialised.

The new regulatory framework, alongside Quidax’s licensing, could potentially alter this trajectory by providing a more stable and secure environment for investors both locally and internationally.

Government Stance and Industry Reactions

The SEC’s licensing of Quidax represents a notable shift in government stance towards the crypto industry, moving from a history of hostility to a more open stance on innovation.

Buchi Okoro, co-founder and CEO of Quidax, stated that the granting of the crypto exchange licence demonstrates the government's openness to innovation and its commitment to building trust in the emerging crypto ecosystem.

Okoro emphasised that this regulatory action is not a sudden shift but rather the result of years of collaborative effort to ensure compliance and proper resource allocation.

Earlier in June, the SEC had given local “virtual asset service providers” a 30-day window to re-register their businesses, signalling a serious move towards stricter oversight.

This re-registration aimed to amend Nigeria’s crypto regulations and ensure proper regulatory oversight.

In a recent interview, Nigerian SEC Chief Emomotimi Agama hinted that licences would be issued "sooner than you think."

With the new licence, Quidax is now positioned to engage with banks and other financial institutions, following the Central Bank of Nigeria’s December 2023 lifting of a previous ban on crypto transfers.

Nevertheless, tensions between the crypto community and the SEC persist.

The SEC issued a warning in June 2023, cautioning Nigerians about the risks of investing in crypto assets, which it labelled as “extremely risky” with potential for “total loss of their investment.”

Ongoing Tensions and Legal Challenges

The relationship between the Nigerian government and the crypto industry remains strained.

The government has targeted Binance, the world’s largest crypto exchange, over allegations of market manipulation and foreign exchange rate manipulation of the naira (NGN).

In February, the government began restricting internet access to crypto exchanges, leading Binance to suspend support for NGN deposits and withdrawals in March.

Additionally, Nigerian authorities have detained Binance executive Tigran Gambaryan, whose legal defence claims that his detention is a scapegoat for broader crackdowns on crypto firms.

Binance CEO Richard Teng has called for U.S. intervention to secure Gambaryan’s release ahead of his trial.

On 8 August, Bitcoin advocate James Otudor filed a lawsuit against the Nigerian government, challenging the restrictions on Nigerians' rights to acquire, own, and trade digital assets.

Otudor’s lawsuit seeks to remove all blocks on crypto exchange platforms, aiming for unrestricted access for all Nigerians.

This legal battle highlights ongoing efforts to push for more expansive crypto rights and greater industry acceptance in Nigeria.