An official circular issued by the Nigerian Securities and Exchange Commission on June 9 revealed that Binance failed to comply country’s regulations. The market regulators argued that Binance Nigeria Limited failed to fulfill the commission requirements while providing crypto services.
Following the commission’s proclamation, Binance Nigeria has been ordered to suspend its operation. A scrutiny of Binance’s operation in the West African country revealed that the crypto exchange was neither registered nor regulated in the region. This obliged the financial watchdog to take legal actions to safeguard consumer and investor interests.
Binance Nigeria Set to Halt Operations As Legal Troubles Mounts
Additionally, the regulators labeled Binance’s operations as illegal and risky. Earlier, the SEC had warned the Nigerians from investing in risky assets such as cryptos. A few months ago, Nigerian policymakers passed the Finance Act 2023 bill into law, imposing a 10% crypto tax from revenue generated from digital assets.
However, Nigeria’s new President Bola Tinubu has urged the regulators to revise the Finance Act 2023 to create a friendly environment for crypto firms.
A few days ago, the largest crypto exchange by daily trading volume Binance.com was on the radar due to noncompliance with US regulations. On June 5, the US Securities and Exchange Commission accused Binance of failing to register as a dealer, broker, and crypto exchange. The SEC filed a lawsuit against Binance at a federal law court for providing unregistered crypto assets to the public.
In 2022 the Nigerian regulatory agencies considered all digital assets as securities. The regulators formulate a well-detailed rulebook for governing the issuance of crypto assets in the country. The rule book aimed at guiding crypto firms to comply with the crypto regulations in Nigeria.
Since then, the crypto firms have complied with the regulation documented in the rule book. On Friday, the Nigeria regulatory watchdog confessed that the Binance case was the first to be reported since the launch of the rule of issuance document in 2021.
Overview of Nigerian Crypto Regulation
Earlier in May, the Nigeria SEC confirmed to commence the pilot project for processing the registration of crypto firms. The SEC confirmed to engage other regulatory agencies, such as the central bank of Nigeria, to process the application for registration on a trial basis.
The meeting between the officials from the Nigerian central bank and SEC will determine whether the market regulators will proceed with the processing of registration applications.
In the meantime, Nigeria has adopted restrictive measures to prevent financial institutions from providing banking services to crypto firms. Nigeria has a growing crypto-savvy community despite the SEC’s restrictive approach.
A recent study revealed that Nigeria ranks among the top countries in Africa with high crypto adoption. In particular, Nigerian millennials and young adults have leveraged crypto technology to improve their quality of life.
Reportedly Nigeria has a significant share of crypto transactions conducted through the peer-to-peer (P2P) platform.
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