Nigeria's Securities and Exchange Commission (SEC) has given crypto exchanges and digital asset traders 30 days to re-register their businesses or face enforcement actions.

In a June 21 statement, the SEC announced the launch of the Accelerated Regulatory Incubation Program (ARIP) for Virtual Assets Service Providers (VASPs) as part of its efforts to update rules on digital asset issuance, offering platforms, exchanges, and custody to keep pace with industry trends.

The regulator directed all operating and prospective VASPs to visit the SEC ePortal and complete the application process within 30 days from the date of the circular.

Nigeria, which ranked second on Chainalysis’ Global Crypto Adoption Index in 2023, has seen substantial growth in crypto use despite a two-year ban by the Central Bank of Nigeria (CBN) on banks facilitating crypto transactions.

The SEC's directive follows increased scrutiny and skepticism toward digital assets. In June 2023, the SEC warned against a fraudulent entity misusing the name of crypto exchange Binance, highlighting the high risks and potential for total investment losses associated with digital assets.

Earlier this year, Nigerian authorities accused exchanges like Binance of facilitating money laundering and influencing the foreign exchange market as locals increasingly favored digital currencies over the naira, exacerbating the naira's devaluation. The Economic and Financial Crimes Commission (EFCC) and the Federal Inland Revenue Service (FIRS) charged Binance executives with tax evasion and money laundering, detaining them for weeks before the charges were dropped.

Despite these challenges, Nigeria's crypto market remains active. The IMF has recommended that the country adopt comprehensive regulations for the industry to address economic issues. The SEC is also exploring tokenization, with plans to pilot a permissioned liquidity pool comprising tokenized bonds and deposits.

The SEC's push for stricter regulations aims to ensure the integrity and stability of the financial system amid the rapid evolution of digital assets.