Digital Exchange: SEC Grants Busha Digital, Quidax Technologies ‘Approval-in-Principle’

Kayode Tokede 

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(SEC), yesterday  granted two Digital Assets Exchanges “Approval-in-Principle” to commence operation under the Accelerated Regulatory Incubation Program (ARIP).  

The companies granted approval are Busha Digital Limited, Quidax Technologies Limited.

Disclosing this in a statement, the Commission said the cohort comprises of two ( Digital Asset Exchanges, four digital asset Offering Platforms and one Digital Asset Custodian.

The SEC in a statement said “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 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”.

Similarly, five firms have been admitted to test their models and technology under the SEC’s Regulatory Incubation Program, RI. They are Trovotech Ltd, Wrapped CBDC Ltd, HousingExhange.NG Ltd, Dream City Capital and Blockvault Custodian Ltd.

The SEC recently 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.   

According to the Commission, “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”.

The SEC further stated that “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 Commission therefore strongly advised the public 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” The SEC added.