One month after Nigeria’s Central Bank lifted a ban on crypto, startups are now pushing for SEC licence

Two crypto startups have applied for licences from Nigeria’s Security Exchange Commission (SEC) after the central bank lifted its 2-year ban on crypto-related bank accounts, a highly-placed source at the exchange told TechCabal, signaling a push by crypto startups to take advantage of a recent u-turn by regulators.

In December, the CBN lifted stringent regulations that had banned banks from transacting with crypto companies. In its place, the apex bank shared guidelines mandating banks to obtain the bank verification number (BVN) of all directors and owners of crypto businesses that use their services. The rules also say cryptocurrency companies must secure a license from the country’s capital markets regulator, the SEC. Earlier in May 2022, the SEC issued rules on offering and collecting digital assets. 

The SEC did not directly respond to TechCabal’s inquiries about which startups had already applied for the licences.

One of the crypto companies thought to have applied is Yellow Card. “We have not made any public moves yet but it is in the process,” said one person with knowledge of the company’s business.

However, Yellow Card did not immediately respond to TechCabal’s questions at the time of this report.

Luno, the London-headquartered cryptocurrency exchange with operations in Nigeria, told TechCabal that it is yet to apply for the license.

Last week, Yellow Card announced a partnership with American crypto exchange platform Coinbase that will allow Nigerians and people in 19 other African countries to use Coinbase’s wallet, purchase stablecoin (USDC), make remittances, save, and do everyday commerce on the platform.

Quidax, another popular crypto exchange in the country, announced free bank account deposits and withdrawals to customers days after the CBN announcement.

While the ban’s lifting eases business for crypto startups, experts doubt it will magically transform the market, which has found ways around the CBN ban to buy, sell, save, and trade crypto.

“Nigerians are very price-sensitive. Some of the platforms sell for about 20% more than relatively risky platforms,” a web3 PR consultant who asked not to be named, told TechCabal.

“Beyond the exorbitant price, these crypto startups operate with a near-saviour complex and think that it is just enough for Nigerians to have access to the blockchain. If these platforms do not significantly become easier to use, people will continue using what they have been using to transact in crypto.”

Even though it came a year after the SEC published regulations to safeguard digital assets, the CBN may have removed the stigma associated with digital currencies, popularly linked to scams. A founder of a now-defunct crypto company told TechCabal, “It is probably the best thing, if not the only positive aspect, about the CBN’s guidelines.”