Nigeria assigns VASPs a 30-day deadline to abide by the new regulations.
Virtual Asset Service Providers (VASPs) are required by Nigerian regulators to revise their applications in accordance with new regulations pertaining to digital asset issuance, providing platforms, exchange, and custody within a 30-day period.
In a formal notice to the public, the Nigerian Securities and Exchange Commission (SEC) revealed plans to amend important legislation pertaining to digital assets. By strengthening the framework and making it more comprehensive and flexible to the intricacies of digital asset markets, the modifications seek to improve the regulatory environment.
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The Accelerated Regulatory Incubation Program (ARIP) has been introduced by the SEC as part of this regulatory reform. Designed specifically for virtual asset service providers (VASPs), this is a unique compliance program.
A special onboarding time has been set up to make it easier for VASPs to take part in the ARIP, per information posted on the SEC website.
Furthermore, the SEC declared that it will take enforcement action against any VASP in operation that violates the guidelines contained in its Circular.
This regulation reform is part of Nigeria’s larger efforts to improve control over its quickly growing cryptocurrency economy.
The SEC Director-General Emomotimi Agama was appointed, and one noteworthy recommendation she made was to increase the registration price for cryptocurrency exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).
The Central Bank of Nigeria (CBN) has released guidelines controlling banking relationships and account operations for virtual asset service providers (VASPs) in the nation, coinciding with these SEC amendments.
This concerted endeavor demonstrates Nigeria’s resolve to responsibly manage the virtual asset ecosystem as opposed to enacting outright prohibitions.
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What are VASPs?
Virtual Asset Service Providers, or VASPs for short, are companies or individuals that offer services pertaining to virtual assets. Digital representations of value that may be exchanged or transferred digitally and utilized for investment or payment reasons are sometimes referred to as virtual assets. Cryptocurrencies like Bitcoin, Ethereum, and other stablecoins are examples of virtual assets.
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The Financial Action Task Force (FATF), an intergovernmental organisation aimed at combating money laundering and terrorism financing, defines virtual asset service providers to include the following services:
Exchange between virtual assets and fiat currencies.
Exchange between one or more forms of virtual assets.
Transfer of virtual assets.
Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
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The Importance of Virtual Asset Service Providers
VASPs play a pivotal role in the adoption and integration of virtual assets into the global financial system. Their importance can be summarised as follows:
Facilitation of Transactions: By providing platforms for buying, selling, transferring virtual assets, or exchanging for other virtual assets, a virtual asset service provider makes it easier for individuals and businesses to participate in the digital economy.
Security and Trust: Custodians and wallet providers offer secure storage solutions, mitigating risks associated with the loss or theft of virtual assets.
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Regulatory Compliance: Virtual Asset Service Providers help ensure that the virtual asset market operates within the legal frameworks established by financial authorities, thereby enhancing trust and reducing the risk of illicit activities.
Innovation and Accessibility: By continuously developing new services and technologies, VASPs contribute to the broader adoption of virtual assets, making them more accessible to the general public.