SEC Nigeria's Ban on Global Crypto Exchange Binance Confirmed; Warns Unregistered Exchanges Against Soliciting Nigerian Investors

On June 9, 2023, the Securities and Exchange Commission (SEC) in Nigeria made a significant declaration, branding Binance Nigeria Limited as an illegal entity in the country. However, Binance, the global cryptocurrency exchange, firmly denied any affiliation with "Binance Nigeria Limited."

Recently, on Friday, July 28, 2023, the SEC clarified its stance on the matter by explicitly referring to Binance through its official website, Binance.com. The circular released by the Commission reiterated that the activities of Binance, along with any other platform the company employs to solicit investors, are not registered or regulated by the SEC. As a result, these operations in Nigeria are deemed illegal.

This latest move by the SEC reflects its cautious approach towards the entire crypto industry. The Commission openly expressed its lack of trust in crypto assets, warning the public about the high level of risk involved, which could lead to a total loss of investments. Moreover, the SEC strongly discouraged any investments with or in crypto platforms that are not registered or regulated by their authority. In a bid to safeguard Nigerian investors, the Commission issued stern warnings to unregistered platforms against soliciting them.

Taking a broader view, the regulations on crypto assets in Nigeria were set in motion on Friday, May 13, 2022, when the SEC introduced comprehensive rules and guidelines for all crypto and digital asset service providers operating within the country. These guidelines encompassed new licensing requirements, platform categorization, and operational guidelines for digital asset platforms.

To register a crypto exchange in Nigeria, platform operators must meet stringent criteria, including a minimum paid-up capital of $1.2 million, a $72,000 registration fee, a $722 processing fee, and a $240 application fee. The SEC's recent declaration of Binance as an illegal entity is indicative of their desire to encourage all crypto exchanges, including Binance and others, to seek registration in Nigeria and adhere to the Commission's guidelines for proper regulation.

It is worth noting that while Binance has obtained permission and registration to operate in various countries worldwide, it has secured official permission to operate solely in South Africa among African nations. This highlights the complexities and challenges faced by global crypto exchanges seeking to expand their operations in the African market.

The recent actions taken by the SEC in Nigeria against Binance signify the Commission's commitment to monitor and regulate the crypto industry within the country. As Nigeria continues to navigate the crypto landscape, these regulatory efforts are aimed at protecting investors and fostering a secure and transparent environment for digital asset trading.