Jai Sahu
The Nigerian securities regulator announced on June 21 that it had updated the digital asset rules to expand their scope and introduced an accelerated process for onboarding virtual asset service providers. The Accelerated Regulatory Incubation Programme provides VASPs with insights into the Commission’s expectations before they fully commence operations.
Regulator Threatens Enforcement Action Against Non-Compliant VASPs
The Nigerian Securities and Exchange Commission (NSEC) is revising rules that govern virtual asset service providers (VASPs) to “expand the scope of regulation in line with current realities.” As part of this effort, the NSEC has introduced the Accelerated Regulatory Incubation Programme (ARIP) for onboarding VASPs.
In a circular issued on June 21, the NSEC directed all operating and prospective VASPs to visit its e-portal and complete the application process within 30 days. Failure to comply with these directives will result in enforcement action by the regulator.
The 13-page ARIP framework states that the objective of this program is to expedite the onboarding of entities that have submitted applications to the Commission. It allows applying entities to receive approval in principle from the Nigerian SEC while awaiting the operationalization of the Digital Assets Rules.
ARIP to Assist the Commission in Understanding Digital Asset Business Models
Additionally, the ARIP provides VASPs with insights into the Commission’s expectations before they fully commence operations.
“It will also provide an opportunity for the Commission to further understand the digital asset business models in order to enhance its regulations to ensure it adequately addresses issues surrounding market integrity, investor protection, and money laundering,” the ARIP framework document said.
Strict Penalties for Non-Compliance Detailed
The Nigerian SEC also reveals the penalties it plans to impose on non-compliant ARIP participants. For example, the Commission mandates that non-compliant VASPs will face a penalty of at least $3,370 (NGN 5,000,000) initially. They will also incur an additional penalty of about $134 for each day of continued non-compliance.
For commercialized VASPs operating without authorization, the NSEC has stated that a penalty of no less than $13,500 will apply. Brokers, market makers, and advisers operating without authorization will have to pay a fine of at least $6,750, according to the Commission.