Nigeria's crypto regulatory framework has hit a snag as the Securities and Exchange Commission (SEC) delays issuing new provisional licenses to crypto startups under its Accelerated Regulatory Incubation Programme (ARIP). The delay marks a setback for digital asset startups hoping for faster approval following the SEC's December 2024 promise to speed up licensing.

According to the SEC's director general, Emomotimi Agama, the commission has observed important issues that need to be addressed, requiring an additional level of due diligence, which he referred to as "Level 3 due diligence." Agama apologized to applicants for the slow pace and acknowledged that gaps and challenges still exist in the startup due diligence process.

The regulatory oversight of Nigeria's crypto sector does not lie solely with the SEC. The commission is working closely with other agencies, including the Economic and Financial Crimes Commission (EFCC), the Nigerian Financial Intelligence Unit (NFIU), and the Office of the National Security Adviser (ONSA), which have independent processes that the SEC "does not control," according to Agama. This multi-agency coordination has significantly slowed the issuance of provisional licenses, leaving many startups stuck in regulatory limbo.

Since issuing provisional licenses to exchanges Quidax and Busha in August 2024, the SEC has not approved any new applicants. Scores of startups that submitted applications under ARIP in June 2024 are still working with the regulator to better understand compliance requirements and develop consumer protection safeguards in a sector often likened to the financial "Wild West."

While the need for tighter scrutiny to curb money laundering and terrorist financing is justified, there is also an urgency for the regulator to move faster. Agama emphasized that the collaboration is a value the SEC wants to adopt more fully to provide a solid crypto regulatory framework. However, for now, crypto startups may be in for a long wait before achieving the regulatory clarity they seek.

The recent passage of the Investment and Securities Act (2025), signed into law by President Bola Tinubu, formally recognizes cryptocurrencies as securities under the SEC's jurisdiction, laying the groundwork for a more structured crypto ecosystem. This development could potentially pave the way for clearer regulations and a more defined framework for crypto startups operating in Nigeria.

As the crypto industry in Nigeria continues to navigate the regulatory landscape, the delay in issuing provisional licenses serves as a reminder of the complexities and challenges involved in creating a robust and effective regulatory framework. The SEC's commitment to ensuring a safe and secure environment for investors and consumers is commendable, but the industry's growth and development depend on a more efficient and streamlined regulatory process.