The Securities and Exchange Commission (SEC) of Nigeria has officially deemed the operations of Binance Nigeria, a subsidiary of the world’s largest crypto trading platform Binance, illegal.
According to a statement released on the SEC’s website on July 9, Binance has been promoting its web and mobile-enabled platforms to Nigerian users without adhering to regulatory requirements or registering with the commission.
The commission expressed its concerns, stating that Binance Nigeria is not authorized or regulated by the SEC, making its operations in the country unlawful.
As the primary regulatory body responsible for investor protection, the SEC emphasized that engaging with Binance Nigeria or any similar unregistered platforms comes with significant risks, cautioning investors to be careful when dealing with crypto-assets and related financial products and services.
This move by Nigeria’s SEC comes in the wake of a lawsuit filed last Monday by the U.S. securities watchdog against Binance, accusing the global crypto exchange of failing to register as a broker or exchange. The lawsuit further alleged that Binance offered and sold unregistered securities to the public.
These legal challenges are putting pressure on Binance, which holds the top spot in terms of market capitalization among all crypto exchanges.
Investor protection and compliance
Nigeria’s SEC introduced regulations for digital assets last year, signaling the country’s attempt to strike a balance between an outright ban on crypto-assets and unregulated usage.
It followed the central bank of Nigeria’s ban in 2021, which prohibited banks and financial institutions from facilitating transactions or dealing with digital currencies.
Despite these restrictions, young Nigerians have embraced cryptocurrencies, utilizing peer-to-peer trading platforms provided by crypto exchanges to circumvent the ban imposed by the traditional financial sector.
As regulatory scrutiny of the crypto industry intensifies worldwide, authorities emphasize the importance of ensuring investor protection and compliance within the sector.
The actions taken by Nigeria’s SEC demonstrate the increasing regulatory focus on cryptocurrency exchanges and their operations. The outcome of these legal challenges will have far-reaching implications for the future of crypto regulations in Nigeria and beyond.