NIGERIA Trends and Developments Contributed by: Tiwalola Osazuwa, Peretimi Akinmodun, Lazarus Uwa Kalu and Mubaraq Popoola, ǼLEX
The implications of this situation are significant. Indeed, the proliferation of social media as a marketing tool has blurred the lines between tra - ditional advertisements and online promotional content. Recognising this shift, the ARCON has sought to classify businesses’ social media posts as advertisements subject to its approval processes. However, it has been argued that the provisions of the ARCON Act were not intended to apply to businesses’ social media posts and that this will impose undue burdens on businesses, par - ticularly small and medium enterprises (SMEs) and stifle creativity in advertisement and digital marketing. Furthermore, a notable challenge to the ARCON’s enforcement of this requirement is the view that it lacks the authority to impose fines as Nigerian courts have consistently held that only courts of law, and not regulatory authorities like the ARCON, have the power to impose fines. The tension between the ARCON’s regulatory objectives and the legal framework governing administrative actions highlights the need for a balanced approach. In practice, the ARCON may need to collaborate with industry stake - holders to develop practical guidelines for social media advertising that balance innovation with consumer protection and compliance with legal principles. Additionally, clearer legislative provi - sions addressing digital advertising specifically could resolve these ambiguities and align regu - latory practice with technological realities. Digital Assets Regulation Introduction of the Accelerated Regulatory Incubation Programme In 2024, the Nigerian cryptocurrency regulatory landscape witnessed significant change with
the introduction of the Securities and Exchange Commission’s (the “SEC”) Framework on Accel - erated Regulatory Incubation Programme for the Onboarding of Virtual Assets Service Providers and other Digital Investments Service Provid - ers (the “ARIP Framework”), to facilitate the onboarding of qualified entities into the SEC’s Accelerated Regulatory Incubation Programme (the “ARIP”) and provide a path to registration for operators. Upon admission into the ARIP, the SEC issues an approval in principle to the operator, enabling the entity to operate, but with some restrictions relating to the nature of business, promotional activity and growing customer base. At the expi - ration of the ARIP period, which is expected to last for as long as the SEC determines, partici - pants are expected to seamlessly transition to full registration. In its earlier attempt at comprehensive regula - tion of digital and virtual assets in Nigeria, the SEC initially released its new Rules on Issuance, Offering Platforms and Custody of Digital Assets (the “Digital Assets Rules”) in 2022. The Digital Assets Rules created various categories of digi - tal assets service providers and their respective registration and licensing requirements, includ - ing virtual assets service providers (VASPs), digital asset offering platforms (DAOPs), digi - tal asset custodians (DACs) and digital asset exchanges (DAXs). However, the Digital Assets Rules were not oper - ationalised and applications for registration or licensing were not accepted by the SEC, leaving cryptocurrency companies in limbo. During this period, the regulatory vacuum was compound - ed by the Central Bank of Nigeria’s (the “CBN”) ban, which effectively restricted cryptocurrency transactions within the formal financial system.
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