NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
Institutions (OFIs) in providing services to the Nigerian Securities and Exchange Commission (SEC)- licensed VASPs/digital assets entities in the country. This shift signals a more open and reg - ulated approach to the cryptocurrency ecosys - tem in Nigeria. While previously the focus was on restricting activity owing to concerns, the new Guidelines aim to provide a framework for safe and monitored engagement between VASPs and the broader financial system. Framework on Accelerated Regulatory Incubation Program for the Onboarding of VASPs and DISPs On 21 June 2024, the SEC launched the Frame - work for Accelerated Regulatory Incubation Program (ARIP) to onboard VASPs and Digital Investment Service Providers (DISPs) in Nigeria in cohorts pending when the SEC operational - ises the Digital Assets Rules. This ARIP creates a special window for entities involved in virtual asset activities to apply for approval in principle from the SEC, allowing them to begin limited operations in the meantime. Upon the Digital Assets Rules becoming opera - tionalised, participants in the ARIP who dem - onstrate adherence to the program’s conditions will subsequently transition into full registration with the SEC. This transition will be subject to a review by the SEC, which may impose addi - tional requirements. The primary objective of the framework is to familiarise the SEC with the business models of prospective VASPs and DISPs while ensuring they align with the coun - try’s regulatory standards. The SEC subsequent - ly issued an exposure draft of amendments to the Digital Assets Rules, which is scheduled to take effect from 30 June 2025, calling for com -
ments on same and subsequently deleted the exposure draft. Forecasting Nigeria’s Fintech Market Growth in 2025 High inflation rate and FX scarcity According to the National Bureau of Statis - tics, as of December 2024, Nigeria’s inflation surged to 34.8%, which is a 30-year high and an approximately 6% YoY increase from the 28.92% recorded in December 2023. Despite the consolidation of all the segments of the FX market into the I&E window efforts of the CBN to improve the supply of FX, the FX market con - tinues to experience a high level of volatility, and this has continued to impact the repatriation of capital and the strain on foreign transactions. Lay-offs and cut-offs Interestingly, it was reported that the CBN laid off approximately 1,000 staff members in 2024. Some operators, such as Traction Apps, also laid off some staff members. However, gener - ally speaking, there was a reduction in reports of lay-offs in 2024 compared to 2023. Increased regulatory activities The changes in leadership at the CBN are antici - pated to bring forth a series of policy reforms to strengthen the national economy. Already in 2024, the CBN issued newly revised guide - lines preventing fintech start-ups from carrying out IMTO services. The CBN also increased the application fees for the IMTO license to NGN10 million. The new rules also set a minimum operating capital of USD1 million for foreign IMTOs and its naira equivalent for their indigenous counter - parts. In a bid to further curb the inflation rate and the free fall of the naira against the US dollar, it is expected that the CBN and other regulatory
563 CHAMBERS.COM
Powered by FlippingBook