The Securities and Exchange Commission (SEC) has given two digital asset exchanges “in-principle approval” to begin operations under the Accelerated Regulatory Incubation Program (ARIP).
The SEC said in a statement on Thursday that the approved companies are Busha Digital Limited and Quidax Technologies Limited.
The approval comes a week after the commission announced plans to license virtual asset providers, including cryptocurrencies, to empower youth and protect investors as adoption rates rise in Nigeria.
The SEC said the ARIP includes various cohorts, including two digital asset exchanges, four digital asset offering platforms, and a digital asset custodian.
“Busha operates a digital exchange that facilitates the buying and selling of crypto assets with fiat currency,” the agency said.
“It enables individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services.
“Busha’s customers use the mobile and web applications to buy, sell, store, send, receive, trade and 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.”
The SEC said Quidax also uses a digital wallet to allow users to store, receive and trade “a variety of cryptocurrencies”.
The statement said five companies have been approved to test their models and technologies under the SEC’s regulatory incubation program.
“They are Trovotech Ltd, Wrapped CBDC Ltd, HousingExhange.NG Ltd, Dream City Capital and Blockvault Custodian Ltd,” the agency said.
“The SEC recently introduced the ARIP to strategically on-board firms which had commenced operations prior to the release of the rules on virtual asset service Providers in May 2022.
“Conversely, the RI Program was created to assess the business models of digital assets firms and test innovative products, services, and technology in a real-time market environment under close supervision by the SEC.”
The commission said the current cohort of the ARIP and RI programs is characterized by the increasing use of distributed ledger technology (DLT) in the creation and trading of crypto assets. The SEC added that the outcome of the trial will influence further political developments.
“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 agency added.
“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 is in place in respect of each product or service”.
“Further applications will also be considered.”
The SEC further noted that the two companies are not the only ones that have applied for the ARIP and RI programs.
The commission said that other applications received will be reviewed and approved on a case-by-case basis, in principle, if they meet all requirements.
“The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorized to carry out the business of crypto trading in any form in Nigeria,” the regulator said.
“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 therefore advised the public not to transact with illegal operators who have not applied and been approved for the ARIP or RI programs.
The regulator also reminded potential investors to always verify on various information portals whether “companies claiming to offer investment services” are legally authorized to do so.
