Proposed rules would also cap retail investments at N1m per issuer and N10m annually, while crypto platforms face tighter supervision and reporting obligations…..
The Securities and Exchange Commission (SEC) has proposed a major increase in the financial and regulatory requirements for companies operating in Nigeria’s digital asset market, including a N30 million registration fee for several categories of operators.
The proposed requirements are contained in the commission’s rules on “Digital and Virtual Asset Operations, Custody and Markets,” released on August 20.
If adopted, the framework would significantly raise the cost of entry for companies seeking to operate cryptocurrency and other digital asset businesses in Nigeria while introducing tighter safeguards for retail investors.
Under the proposed framework, digital asset exchanges (DAXs), digital asset custodians (DACs), digital asset platform operators (DAPOs), digital asset offering platforms (DAOPs) and real-world asset tokenisation platforms (RATOPs) would each be required to pay a N30 million registration fee.
The commission is also proposing substantial minimum capital requirements for operators.
DAXs and DACs would each need a minimum capital of N2 billion, while DAPOs, DAOPs and RATOPs would be required to maintain at least N500 million in capital.
Virtual asset service providers (VASPs) would face a minimum capital requirement of N200 million.
Applicants under the VASP category would also be required to pay a N100,000 processing fee and a N300,000 application fee.
The proposed framework would also require regulated entities to maintain a fidelity insurance bond.
According to the SEC, the bond would need to cover at least 25% of an operator’s minimum paid-up capital.
The requirement is designed to provide an additional layer of protection around regulated digital asset operations and the funds or assets handled by market participants.
Companies seeking to operate under the SEC’s Accelerated Regulatory Incubation Programme (ARIP) would also face separate charges.
The commission proposed an initial assessment fee of N200,000 and an ARIP application fee of N2 million.
Operators would subsequently be subject to supervisory charges linked to their turnover.
For digital asset exchanges operating under ARIP, the proposed supervisory fee is 0.015% of adjusted turnover, while other entities under the programme would pay 0.0075%.
Following full registration, the rate would increase to 0.025% of adjusted turnover for digital asset exchanges and 0.015% for other regulated entities.
The SEC said the fees would be payable quarterly or at another frequency determined by the commission.
Beyond regulating operators, the SEC is proposing limits on how much retail investors can commit to digital asset offerings.
Under the proposed rules, an individual retail investor would not be allowed to invest more than N1 million in a single issuer or more than N10 million across digital asset offerings within a 12-month period.
The commission, however, would retain the authority to adjust the limits when necessary.
The proposed restrictions are aimed at limiting the potential exposure of individual investors to losses in what remains a highly volatile and rapidly evolving asset class.
The proposed rules would impose additional safeguards where a retail investor wants to exceed certain thresholds.
If an investor seeks to put more than N1 million or 5% of their net worth, whichever is higher, into a digital asset offering, the relevant platform would have to meet additional requirements before accepting the investment.
The platform would be required to provide a prominent risk warning and obtain the investor’s explicit consent to proceed.
It would also have to establish that the investor understands the nature of the investment and the significant risks involved.
In addition, the platform would need to assess whether the investment is appropriate for the individual, taking into account factors including the investor’s knowledge, experience, financial position and ability to absorb potential losses.
Records of the risk warning, consent, investor confirmation and suitability assessment would also have to be maintained.
The proposed rules would place responsibility on digital asset offering platforms to actively monitor compliance with the investment limits.
Platforms would be expected to establish systems capable of assessing and enforcing applicable thresholds, including investor categorisation, risk acknowledgement, net-worth declarations or assessments and aggregation of investments made through their platforms.
Institutional investors, qualified investors, high-net-worth individuals and other categories recognised by the SEC could be exempt from some of the prescribed limits.
The commission would also have the power to introduce different thresholds and requirements depending on the type of digital asset, investor or platform involved.
The proposed framework also addresses foreign stablecoin issuers seeking to operate in Nigeria.
Such issuers would be required to appoint or maintain a local representative and demonstrate that they are authorised to operate in an acceptable foreign jurisdiction.
They would also have to comply with Nigeria-specific requirements relating to reserves, liquidity and redemption support, subject to conditions prescribed by the SEC.
The proposal reflects the commission’s broader attempt to bring digital asset activities targeting Nigerian residents within a formal regulatory framework, regardless of where an operator is incorporated.
Under the proposed rules, no person or company would be permitted to conduct a digital or virtual asset business, service, function or activity in Nigeria—or target people resident in Nigeria—without obtaining the appropriate registration, approval or authorisation from the SEC.
Regulated entities would also be required to comply with Nigeria’s corporate governance code, the SEC’s governance requirements and other applicable standards.
The commission further proposed mandatory participation in the Accelerated Regulatory Incubation Programme for companies seeking to operate in Nigeria’s crypto market.
The proposed framework represents a significant tightening of Nigeria’s regulatory approach to digital assets, combining higher entry requirements with stronger investor protection measures.
For operators, the proposed N30 million registration fee and capital thresholds could substantially raise the cost of entering or remaining in the market. For investors, particularly retail participants, the proposed investment caps and suitability checks would introduce additional controls intended to reduce exposure to excessive losses.
The rules remain proposals at this stage, meaning the final requirements could change following the regulatory process and any feedback considered by the SEC.
