Nigeria’s Proposed Crypto Regulation Introduces Capital Requirements, Local Presence Rules for Global Platforms

Nigeria’s Securities and Exchange Commission (SEC) has proposed new regulations that would require cryptocurrency businesses to obtain licensing if they operate within Nigeria, serve Nigerian residents, or target the country’s investors via digital platforms. The framework would impose capital, custody, and stablecoin-reserve requirements, potentially increasing operational costs for international crypto firms serving Nigerian users.

The proposal, published on August 20, solicits public comments by September 3, though no specific deadline time or time zone is provided. The measures remain under consultation and are not yet enforceable rules.

The regulations adopt a broad territorial scope, applying to offshore exchanges and platforms based on their target audience rather than their legal jurisdiction. This includes entities operating in Nigeria, providing services to residents, or directly or indirectly targeting Nigerian investors through digital channels.

A digital-asset business operating in Nigeria or targeting residents would need SEC registration, approval, or authorization. Applicants are generally required to incorporate locally, maintain a physical office, and appoint a resident executive (e.g., CEO or managing director), along with licensed local representatives. Foreign entities may still qualify under SEC frameworks if they meet specified conditions.

Stablecoin issuers seeking access to the Nigerian market would follow a distinct pathway. Those targeting Nigeria or whose tokens are used by regulated entities must maintain a local representative and adhere to reserve, liquidity, redemption-support, or other prudential standards set by the SEC.

The ₦2 billion capital threshold applies specifically to Digital Asset Exchanges and Custodians, accompanied by a ₦30 million registration fee. Other categories, such as Digital Asset Platforms, Digital Asset Offering Platforms, and Real World Asset Tokenization Offering Platforms, require ₦500 million capital and the same fee. The general VASP (Virtual Asset Service Provider) classification demands ₦200 million capital and a ₦15 million fee.

Applicants must also secure a fidelity insurance bond covering at least 25% of their minimum paid-up capital. This standalone bond operates alongside, not within, capital and fee requirements.

Custodians must keep at least 80% of client digital assets in cold storage, limiting hot and warm wallets to operational needs unless the SEC specifies a different percentage.

Stablecoin issuers face tiered reserve requirements: Naira-backed and commodity-backed tokens need 100% reserves, foreign-currency-backed tokens require 120%, and crypto-backed stablecoins start at 150%, with additional buffers up to 200% based on volatility, liquidity, concentration, and collateral quality.

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