The Nigerian securities regulator announced on June 21 that it had amended the digital asset rules to broaden their scope and introduced an accelerated process for onboarding virtual asset service providers (VASPs). The Accelerated Regulatory Incubation Programme (ARIP) aims to provide 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 governing VASPs to “expand the scope of regulation in line with current realities.” As part of this effort, the NSEC has introduced 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.
ARIP to Expedite VASP Onboarding
The 13-page ARIP framework outlines the objective of this program as expediting the onboarding of entities that have submitted applications to the Commission. It allows applying entities to receive approval in principle from the NSEC 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 stated.
Penalties for Non-Compliance
The NSEC also disclosed the penalties it will impose on non-compliant ARIP participants. Non-compliant VASPs will be liable to a penalty of not less than $3,370 (NGN 5,000,000) at the first instance, with an additional penalty of approximately $134 imposed for every day of default.
For commercialized VASPs operating without authorization, the NSEC stated a penalty of no less than $13,500 will be imposed. Brokers, market makers, and advisers operating without authorization will face a fine of no less than $6,750, according to the Commission.
