Press Release: Update on the SEC’s Accelerated Regulatory Incubation Program and Regulatory Incubation Program
In furtherance of its commitment to enabling innovation that would deepen the capital market while guaranteeing the protection of investors, the Securities and Exchange Commission (“the SEC”) hereby announces that two (2) Digital Assets Exchanges have been granted “Approval-in-Principle” to commence operation under the Accelerated Regulatory Incubation Program [“ARIP”]. Similarly, 5 firms have been admitted to test their models and technology under the SEC’s Regulatory Incubation [“RI”] Program.
It would be recalled that the SEC introduced the ARIP to strategically on-board firms which had commenced operations prior to the release of the Rules on Virtual Asset Service Providers in May 2022. Conversely, the RI Program was created to assess the business models of Digital Assets firms and test innovative products, services and technology in a real-time market environment under close supervision by the SEC.
Specifically, the current cohort of the ARIP and the RI Program is characterized by the increased use of distributed ledger technology [“DLT”] in creating and trading crypto assets The outcome of the process would inform further policy development in this space. Tests would be conducted on a short-term and small-scale basis and the SEC would continue to work with the participating firms to agree on testing parameters as well as robust consumer safeguards.
The referenced Approvals-in-Principle are a precursor to the grant of full registration by the SEC and are meant to ensure that appropriate protection and transparency is in place in respect of each product or service.
Participants in the cohort
The cohort comprises of two (2) Digital Asset Exchanges, four (4) Digital asset Offering Platforms and one (1) Digital Asset Custodian as follows:
| Approved ARIP Firm | Function | Objective |
| Busha Digital Limited | Digital Assets Exchange | Busha operates a digital exchange that facilitates the buying and selling of crypto assets with fiat currency. It enables individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services.
Busha’s customers use the mobile and web applications to buy, sell, store, send, receive, trade and invest and make payments in cryptocurrencies. |
| Quidax Technologies Limited | Digital Assets Exchange | Quidax Technologies Limited operates a cryptocurrency trading platform in Nigeria. The platform leverages blockchain technology to list and trade already issued crypto tokens (assets).
The services are provided via a proprietary blockchain owned and controlled by Quidax. The exchange platform is both web and mobile enabled for ease of access and use. Quidax also utilizes digital wallet to enable its users store, receive and transact in variety of cryptocurrencies. |
| Trovotech Ltd | Digital Asset Offering Platform | Trovotech Ltd has developed a blockchain-based platform to facilitate the creation of digital tokens to enable issuance and trading of tokenized real world illiquid assets as securities.
Assets to be tokenised include housing, agriculture, and infrastructure. |
| Wrapped CBDC Ltd | Digital Asset Offering Platform
|
Wrapped CBDC intends to introduce a Nigerian issued stablecoin (cNGN or c₦), that will be pegged at c₦1:₦1 to facilitate local and cross border crypto payment transactions.
c₦ is intended to be used to facilitate crypto/digital assets transactions on recognised digital Exchanges. |
| HousingExhange.NG Ltd | Digital Asset Offering Platform
|
HXAfrica solution is designed to enable developers raise capital via tokenization of properties and also provide an avenue to liquidate investments via the integrated Exchange feature. Intended lot sizes for real estate tokens are planned to be ₦50,000. Token owners would also earn rent and capital gains. |
| Dream City Capital | Digital Asset Offering Platform | DreamCity has developed a digital real estate investment platform to offer investors the opportunity to acquire equity ownership in pre-vetted and funded residential and commercial real estate.
The model streamlines and warehouses investors equity and assets through a Special Purpose Company (SPC) framework. |
| Blockvault Custodian Ltd | Digital Asset Custodian | Blockvault is a digital asset custodial service that seeks to provide a secured infrastructure for the storage, management, and safekeeping of assets on behalf of its clients.
The platform is expected to demonstrate adequate AML and KYC checks, appropriate sanctions screening and continuous transaction monitoring in compliance with applicable AML/CFT laws and rules. |
It is noteworthy that the above firms are not the only entities that have applied to ARIP and the RI Program. Other applications received are being assessed and would be granted Approval-in-Principle on a case-by-case basis as they meet all SEC requirements.
The SEC uses this medium to reiterate that only approved digital exchanges and platforms are legally authorized to carry out the business of crypto trading in any form in Nigeria. In this regard, the ARIP and RI remain the only avenues for well-intentioned entities to legitimately introduce their digital products and services to the Nigerian Capital market.
The public is strongly advised to refrain from dealing with illegal operators who have not applied to and received the SEC’s approval under the ARIP or the RI Program. Intending investors are also reminded to always confirm from the various SEC information portals whether entities purporting to provide investment services are legally empowered to so do.