The Nigerian Securities and Exchange Commission (SEC) recently released a circular regarding the trading activities of Binance Nigeria Limited, a subsidiary of the global cryptocurrency exchange Binance. According to the circular issued on 9 June, Binance Nigeria Limited is unlawfully soliciting Nigerian investors to trade cryptocurrencies on its web and mobile platforms.
SEC: Binance Nigeria Is Operating Illegally
The SEC highlighted that it had not granted any license or approval to Binance Nigeria Limited to operate in the country, meaning that its operations are essentially illegal. The SEC also cautioned Nigerians to be wary of investing in crypto assets and related financial products and services if the service provider is not registered or regulated by the Commission.
“Nigerian investors are hereby warned that investing in crypto-assets is extremely risky and may result in total loss of their investment,” the SEC stated.
The Nigerian SEC has directed Binance Nigeria Limited to cease all forms of solicitation of Nigerian investors with immediate effect. The action follows a lawsuit filed against Binance by the U.S. SEC, which alleges that the company sold unregistered securities to the general public and did not register as a broker or exchange.
Nigerian SEC’s Regulatory Stance on Crypto
The Securities and Exchange Commission SEC of Nigeria has taken a cautious stance on cryptocurrencies in Nigeria. While acknowledging the potential benefits of digital assets and their underlying technology, the SEC has also emphasized the need for investor protection and has warned against the risks associated with cryptocurrency investments.
Last year, the Nigerian SEC issued guidelines for the regulation of digital assets. The guidelines require that any issuer of digital assets that are considered to be securities must register with the SEC. The Commission has also warned investors against investing in unregulated digital assets.
On the other hand, the Central Bank of Nigeria (CBN) has taken a relatively hardline stance on cryptocurrency. In February 2021, the CBN issued a circular to banks and other financial institutions, directing them to stop facilitating cryptocurrency transactions. The CBN cited concerns about the risks of cryptocurrency, including its use for money laundering and terrorism financing.
