Despite a recent upliftment of restrictions on Nigerian banks facilitating cryptocurrency transactions, the nation’s local crypto exchanges remain heavily discouraged. This economic strain is due largely in part to daunting licensing requirements set forth by the Nigerian Securities Exchange Commission (SEC), according to crypto analyst Rume Ophi.

The SEC’s stipulation of a steep upfront capital requirement of 500 million naira ($556,620) has shaken local exchanges, leaving them fearful this will usher in a new reign of predominantly foreign exchanges in Nigeria. This requirement was made public in May 2022 when the SEC unveiled a detailed 54-page document outlining the regulations and protocols for cryptocurrency service providers.

Despite this alarming prospect for local exchanges, the new regulations have opened doors for providers and provide specific guidelines for banking and financial institutions in their interactions with digital assets. To continue operations, exchanges must comply and secure a virtual asset service provider (VASP) license from the SEC.

Notably, a recent survey featuring 15 countries unveiled that Nigeria, Africa’s largest economy, boasts the world’s most cryptocurrency-aware population. The survey’s results consolidated Nigeria’s well-positioned ranking as second in crypto adoption among 154 countries studied.

Unfortunately, the hopes of accelerated foreign crypto investment in the country have not come to fruition. Analyst Rume Ophi believes that lifting restrictions on financial institutions from servicing crypto exchanges will stimulate growth in foreign crypto investment and open job opportunities for Nigerians in the crypto industry and Web3, the next generation of internet services powered by blockchain technology.