The cryptocurrency trading platform Binance has outlined two conditions that must be met before it can consider registering under Nigeria’s Securities and Exchange Commission’s (SEC) special framework program for onboarding Virtual Assets Service Providers (VASPs), including crypto platforms.
Binance’s position is in response to the regulatory frameworks set out for cryptocurrency platforms by Nigeria’s regulatory body, SEC, which includes opening an office in Nigeria.
Earlier reports indicated among other requirements, the SEC’s framework applies to virtual asset service providers and token issuers conducting business in Nigeria or offering services to Nigerian consumers, including platforms that facilitate the offering, trading, exchange, custody, and transfer of virtual/digital assets.
Recall the SEC has granted an Approval-in-Principle to two crypto exchanges, Quidax and Busha, giving them the status of legally recognized crypto trading platforms in the country under the Accelerated Regulatory Incubation Programme (ARIP).
Through ARIP, the SEC has opened the door for cryptocurrency platforms to come under the federal government’s regulatory purview, considering tax obligations and other pertinent national security issues.
In response, a Binance spokesperson told Nairametrics in an exclusive interview that two conditions must be met before it may consider joining ARIP.
Here are the conditions:
- Release of Detained Binance Executive, Tigran Gambaryan
Binance believes that its executive must be released from Nigerian custody before it can explore joining ARIP.
- Settlement with the Nigerian Government
Recall that Nigeria’s Minister of Information, Idris Mohammed, had accused Binance of having a turnover of over $20 billion in Nigeria in 2023 alone, without paying taxes.
The federal government has already commenced prosecution of Binance on the grounds of tax evasion, money laundering, and foreign exchange contravention, while the platform denies these allegations.
The spokesperson stressed that until legal and regulatory bottlenecks with Nigerian government authorities are resolved, coming under the SEC’s program is not in view.
“We are pleased that Nigeria is making progress in the development of its digital assets regime. We hope that someday soon, once Tigran has been freed and our issues are settled, we may seek registration,” the Binance spokesperson stated.
According to our source, Binance still enjoys significant patronage from Nigerians and does not see the need to comply with the Security Exchange Commission’s onboarding framework, which mandates that all VASPs, including crypto firms, establish an office in Nigeria under ARIP.
The source, who chose not to be named because the official was not authorized to speak, mentioned that many VASPs’ requests to join the framework are currently pending.
The source told Nairametrics in an exclusive chat that the Commission anticipates Binance will register in Nigeria, although the crypto exchange firm does not see the need due to its patronage from Nigerians.
The official stated that Nigerians still trade with Binance, but the only restriction is on bank transfers.
“Binance is not regulated by the SEC in Nigeria. That is why we are trying to make them register, but they say they don’t need to register because Nigerians already have access to their platform. That is why they are not coming to register. They see no need,” the source added.
The official also revealed that, due to ongoing court cases against Binance in Nigeria, the platform has somewhat reduced its influence on Nigerians, although Nigerians still use Binance features through virtual private networks (VPNs) and other means.
The official emphasized that the SEC does not regulate foreign crypto firms, but under its rules, every foreign crypto platform must establish an office in Nigeria so the Commission can supervise them.
The source added that, in the long run, Binance will have to register due to the high number of Nigerians trading on their platform.
Our source also reached out to SEC Director Abdulkadir Abbas regarding Binance. His response was that the SEC’s press release on ARIP and approval for Quidax and a few others remains Nigeria’s “position” for all cryptocurrency platforms seeking to operate lawfully in Nigeria.
Meanwhile, another source familiar with developments at Binance’s legal dispute with the federal government confirmed to Nairametrics that the crypto firm has not adhered to the SEC’s framework because they believe it is not supported by any law of the National Assembly.
Additionally, the source claimed the framework was allegedly hurriedly formulated by the SEC after the arrest and arraignment of its executives by Nigerian authorities.
What to Know
Nigeria is among the countries with the highest and fastest crypto adoption rates. Over 22 million people (10.3% of the population) are active crypto owners.
The crackdown on peer-to-peer naira trading by the Nigerian SEC led to Binance and KuCoin delisting the naira from their platforms.
The spat between Nigerian authorities and Binance, the largest crypto exchange in the world, has been widely covered in major news outlets.
In a statement attributed to a Binance spokesperson on September 3, 2024, the platform stated that Nigerian authorities do not need to detain Tigran to settle any alleged past issues.
But FG alleges Gambaryan played a role in enabling the contravention of Nigeria’s laws.
As it stands, all eyes are on Nigerian courts to pass verdicts on FG’s legal dispute with Binance.
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