Nigeria’s Securities and Exchange Commission (SEC) has proposed new rules that could make it significantly more expensive for offshore crypto platforms to serve Nigerian customers, with local presence, capital, custody and stablecoin-reserve requirements at the centre of the plan.
The proposals would apply to crypto businesses operating in Nigeria, providing services to Nigerian residents or targeting the country’s investors and market through digital channels. That means the rules could reach international exchanges and other platforms even if they are incorporated outside Nigeria.
The SEC published the proposals on 20 August and has opened a two-week consultation period. The deadline for comments is 3 September, although the regulator’s consultation page does not specify a closing time or time zone.
The measures are not yet in force. They remain proposals under consultation and could be changed before any final rules are adopted.
Under the proposed wording, a digital-asset business operating in Nigeria or targeting Nigerian residents would need to obtain registration, approval or authorisation from the SEC.
Applicants would generally be expected to incorporate in Nigeria unless the Commission agrees otherwise. They would also need to maintain a registered office in the country and appoint a resident chief executive, managing director or equivalent principal officer, as well as resident sponsored individuals.
The proposals also make provision for foreign entities to register or obtain authorisation through SEC frameworks where the relevant conditions are met.
Capital and insurance requirements
The most demanding minimum-capital requirement would apply to Digital Asset Exchanges and Digital Asset Custodians. Schedule I of the proposal sets their minimum capital at ₦2 billion, with a separate registration fee of ₦30 million for each licence class.
Digital Asset Platforms, Digital Asset Offering Platforms and Real World Asset Tokenization Offering Platforms would face a minimum-capital requirement of ₦500 million and the same ₦30 million registration fee.
The general Virtual Asset Service Provider category is listed with minimum capital of ₦200 million and a registration fee of ₦15 million.
The proposed ₦2 billion threshold would therefore not apply to every type of licence.
Schedule I would also require firms to hold a current fidelity insurance bond worth at least 25% of the required minimum paid-up capital. The bond would be an additional obligation rather than part of the minimum-capital or registration-fee requirements.
Custodians would face a separate digital-asset storage rule. At least 80% of customers’ digital and virtual assets would have to be kept in cold storage, unless the SEC prescribed a different percentage. Hot and warm wallets would be limited to operational requirements.
Stablecoin rules
Foreign stablecoin issuers would have a separate route into the Nigerian market. An issuer targeting Nigerian users, or whose token was intended to be used by a regulated entity in Nigeria, would need to appoint a local representative.
It would also have to meet reserve, liquidity, redemption-support and other prudential requirements set by the SEC.
The proposal establishes different reserve floors depending on the type of stablecoin. Naira-backed and commodity-backed tokens would require at least 100% backing, while tokens backed by foreign currencies would require 120%.
Crypto-backed stablecoins would begin with a 150% reserve requirement. Schedule II sets a collateral range of 150% to 200%, depending on factors including volatility, liquidity, concentration and the quality of the collateral.
If approved, the framework would require offshore providers serving Nigerian users to establish a local compliance route or risk losing access to that market. Exchanges and custodians would face the highest stated capital requirement, while stablecoin issuers would carry a separate balance-sheet burden linked to the assets supporting their tokens.
The article’s author, Liam Wright, is also known as “Akiba”. He is a reporter, podcast producer and Editor-in-Chief at CryptoSlate, and believes decentralized technology has the potential to make…
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