One month after the Central Bank of Nigeria lifted the ban on cryptocurrencies, startups are now seeking a Securities and Exchange Commission license
Two cryptocurrency startups have applied for licenses from the Nigerian Securities Exchange Commission (SEC) after the central bank lifted its two-year ban on cryptocurrency-linked bank accounts, a highly placed source at the exchange told TechCabal, indicating… Cryptocurrency startups are being pushed to take advantage of a recent shift by regulators.
Quidax and Luno, two popular cryptocurrency exchanges, have reportedly started talking to the SEC since October 2023, a source familiar with the talks told TechCabal.
Luno told TechCabal that it has not yet applied for a license while Quidax declined to comment on this story.
Another cryptocurrency company that is also said to be in talks with regulators is Yellow Card. “We haven't made any public moves yet, but they are in the works,” said one person familiar with the company's business.
Last week, Yellow Card announced a partnership with US cryptocurrency exchange Coinbase that will allow Nigerians and people in 19 other African countries to use the Coinbase wallet, buy stablecoins (USDC), make remittances, save, and do day trading on the platform.
Cryptocurrency startups are moving fast
While lifting the ban will make business easier for cryptocurrency startups, experts are skeptical that it will magically change the market, which has found ways around the CBN's ban on buying, selling, holding and trading cryptocurrencies.
“Nigerians are very price sensitive. Some platforms sell for about 20% more than relatively risky platforms,” a web3 PR consultant who requested anonymity told TechCabal.
“Besides the high price, these crypto startups are working with a quasi-savior pool and believe that it is enough for Nigerians to have access to blockchain. If these platforms do not become significantly easier to use, people will continue to use what they were using to transact in cryptocurrencies.
Although this came a year after the Securities and Exchange Commission published regulations to protect digital assets, the Central Bank of Nigeria may have removed the stigma associated with cryptocurrencies, commonly associated with scams. “This is probably the best thing, if not the only upside, regarding the CBN guidelines,” one of the founders of the now-defunct cryptocurrency company told TechCabal.
In December, the Central Bank of Nigeria lifted strict regulations that prevented banks from doing business with cryptocurrency companies. Instead, the main bank shared guidelines requiring banks to obtain a Bank Verification Number (BVN) for all managers and owners of cryptocurrency companies who use their services. The rules also stipulate that cryptocurrency companies must obtain a license from the country's capital markets regulator, the Securities and Exchange Commission. Earlier in May 2022, the SEC issued rules on offering and collecting digital assets.
The SEC did not directly respond to TechCabal's inquiries about startups that have already applied for licenses.
*Editor's note: This article has been updated to show that Quidax and Luno are engaging regulators.
