The Nigerian securities regulator announced on June 21 that it has made changes to the rules governing digital assets in order to broaden their scope and has implemented a faster process for onboarding virtual asset service providers (VASPs). The Accelerated Regulatory Incubation Programme (ARIP) offers VASPs insights into the regulator's expectations before they officially begin operations.
The Nigerian Securities and Exchange Commission (NSEC) is amending regulations for VASPs to "expand the scope of regulation in line with current realities." To facilitate this, the NSEC has introduced the ARIP, which allows VASPs to be onboarded more quickly.
In a circular issued on June 21, the NSEC instructed all existing and prospective VASPs to visit its e-portal and complete the application process within 30 days. Failure to comply with these instructions will result in enforcement action by the regulator.
The 13-page ARIP framework aims to expedite the onboarding of entities that have submitted applications to the Commission. It enables these entities to receive preliminary approval from the NSEC while they wait for the Digital Assets Rules to come into effect.
In addition, the ARIP provides VASPs with insights into the regulator's expectations before they fully commence operations. The ARIP framework document stated that it will also give the Commission an opportunity to gain a deeper understanding of digital asset business models, allowing it to enhance its regulations to address issues related to market integrity, investor protection, and money laundering.
The NSEC has also disclosed the penalties that will be imposed on non-compliant participants in the ARIP. For example, VASPs that fail to comply will face a penalty of at least $3,370 (NGN 5,000,000) for the first offense, with an additional penalty of approximately $134 for each day of non-compliance.
For VASPs that operate without authorization, the NSEC will impose a penalty of no less than $13,500. Brokers, market makers, and advisers operating without authorization will be fined no less than $6,750, according to the Commission.
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