The new requirements are part of a wider move to boost regulatory oversight while also aiding local market growth.
The SEC new guidelines, which you might want to call Crypto regulatory incubation stipulates that all fintech and crypto firms must register their physical offices in Nigeria. The is a mandatory requirement for all VASPs that want to be licensed to operate within Nigeria.
Accelerated Regulatory Incubation Program (ARIP) For VASP License
The new rules form part of an “overreaching” program that seeks to bring sectors more firmly under the regulatory oversight of the SEC while maintaining development and support for the local market.
This move comes after the country has struggled to prop up its local fiat currency amid a crypto-fueled naira crisis.
Key Provisoins for VASPs License
Pre-Qualification Requirements
- Company must have an office in Nigeria where regulatory supervision reports will be confirmed and customer service complaints received. They have to harness innovative/disruptive tech so they can provide new or improved financial service or product.
- The business has to be in the financial services regulated by SEC. Applicants must be ready to begin live customer operations and agree to seek full registration as soon as the rules permitting such are in place.
- The product must solve a specific problem or benefit actors in consumers/provider ends. Investor Safety – Products must be investor-friendly, and firms need to complete a FinTech Assessment Form even before registering with the SEC.
Operational Requirements
- An applicant must prove competence and must possess requisite skillset, as well having experience of the Financial Services Technology space. Applicant would have to fill the clients in and keep the SEC informed. They must adhere strictly to compliance with applicable laws, rules, and regulations.
- Strict adherence to the Anti-Money Laundering and Counter-Terrorism Financing requirements is binding. All procedures must be defined with respect to holding and controlling client assets. Reports are to be submitted to the SEC on a monthly basis
Restrictions and Conditions
- The guidelines, which will bind VASPs under regulatory incubation defines certain conditions. Top on this list is that they are forbidden from promising return on investment of financial promotions. Also there is a limit on the numbers of client they can on-board.
- That incubation period is confined to one year. After which firms must either enroll permanently or close the gates if they do not meet certain eligibility.
- The SEC can also end the registration of a firm if they no longer are eligible or broke any of the rules. Deviation from its implementation plan or failure to send in their reports can also lead to termination.
An application should provide a comprehensive execution plan that describes the business model, goals & objective. Setting timelines and milestones, risk-management program as well communication approach with clients.
Steps for what happens at the termination of the incubation period, whether that be through completion of acceptance or an exit strategy should also been in this blueprint.
