Nigeria’s Securities and Exchange Commission (SEC) wants digital-asset businesses to bring more money—and much stronger controls—to the table.
Under a proposed regulatory overhaul published on August 20, the SEC would require Digital Asset Exchanges (DAXs) and Digital Asset Custodians (DACs) to maintain minimum capital of ₦2 billion each.
But the capital requirement is only part of the story.
The proposed framework also sets new expectations for custody, cybersecurity, transaction monitoring, regulatory reporting, supervisory fees and the way digital-asset firms move from incubation to full registration.
For Nigeria’s crypto industry, the message is clear: access to the market is becoming more expensive—and compliance is becoming far more demanding.
The ₦2 billion question
The SEC’s proposed capital structure would not treat every digital-asset business the same way.
The proposed minimums are:
- DAXs: ₦2 billion
- DACs: ₦2 billion
- Digital Asset Platform Operators (DAPOs): ₦500 million
- Digital Asset Offering Platforms (DAOPs): ₦500 million
- Real-World Asset Tokenisation and Offering Platforms (RATOPs): ₦500 million
- Virtual Asset Service Providers (VASPs): ₦200 million
That creates a risk-based hierarchy. Businesses handling exchange infrastructure and client assets would face the largest capital buffer, while firms performing narrower functions would operate under lower thresholds.
The proposed rules define a DAX broadly around platforms that enable secondary trading of digital or virtual assets, while a DAC would be responsible for holding or safeguarding those assets or the private keys that control them.
In other words, the SEC is putting its biggest financial demands around the infrastructure where large volumes of assets and transactions can accumulate.
Exchanges would face tighter controls over customer assets
The proposed ₦2 billion threshold comes with a broader set of operational safeguards.
For exchanges, customer assets would have to remain separate from the company’s own property and from assets belonging to related companies or service providers.
An exchange also could not simply use customer holdings as working capital or deploy them for purposes unrelated to authorised deposits, trading, settlement or withdrawals.
The rules would place additional limits on exchange-operated custody. Where an exchange’s custody activities go beyond limited operational wallet functions, it could need to appoint a separately registered custodian or obtain the appropriate custody registration itself.
That distinction matters because trading and safeguarding assets would no longer be treated as interchangeable functions.
Custodians would have to keep 80% of client assets offline
One of the proposal’s most significant security requirements is aimed directly at custodians.
Under the draft framework, at least 80% of clients’ digital or virtual assets would generally have to be kept in cold storage, unless the SEC specifies a different percentage.
Hot and warm wallets would instead be limited to assets reasonably needed for functions such as:
- withdrawals;
- settlement;
- transaction processing; and
- other legitimate operational requirements.
Custodians would also have to establish controls around wallet limits, reconciliation, monitoring and access.
The security requirements go further. Key-management arrangements would need controls designed to prevent one individual from becoming a single point of failure. Material transactions would also require multi-signature or equivalent safeguards, alongside segregation of duties and recovery mechanisms.
The underlying principle is straightforward: make customer assets harder to steal, harder to misuse and harder to lose through one operational mistake.
The regulatory bill would extend beyond capital
For operators, raising the required capital would not be the only financial hurdle.
The proposal would impose registration charges of ₦30 million on DAXs, DACs, DAPOs, DAOPs and RATOPs. VASPs would face a ₦15 million registration fee.
Applicants would also pay a ₦100,000 processing fee and a ₦300,000 application fee.
Then come recurring supervisory charges.
Under the Accelerated Regulatory Incubation Programme (ARIP):
- DAXs would pay 0.015% of adjusted turnover.
- Other participating entities would pay 0.0075%.
After full registration:
- DAXs would pay 0.025% of adjusted turnover.
- Other regulated entities would pay 0.015%.
The SEC has indicated that these charges could be reviewed after the first 12 months and periodically thereafter, taking market conditions and supervisory costs into account.
The proposal would also require regulated entities to maintain a fidelity insurance bond covering at least 25% of their minimum paid-up capital.
ARIP offers a route into the market—but not a free pass
The SEC is not proposing a system in which every applicant must immediately jump into full registration.
Instead, the framework incorporates the Accelerated Regulatory Incubation Programme, or ARIP, which is designed to bring eligible digital-asset and related investment businesses into a controlled regulatory environment before full registration. The SEC describes ARIP as a pathway for testing business models while assessing operational readiness, governance, technology and investor-protection safeguards.
Applicants entering ARIP would face an initial assessment fee of ₦200,000 and an ARIP application fee of ₦2 million, according to reporting on the proposed framework.
Approval-in-principle should not be confused with a permanent licence. The SEC has repeatedly emphasised that AIP under ARIP is conditional and does not amount to final registration.
The regulator would use the incubation period to determine whether an operator has the financial, technological, governance, operational and compliance capacity needed for full registration.
That makes ARIP more than a softer licensing route. It is also a proving ground.
This is much bigger than crypto exchanges
The proposal is designed to regulate an entire digital-asset ecosystem, not just cryptocurrency trading platforms.
Its scope covers activities including:
- digital and virtual asset issuance and offerings;
- tokenisation and related lifecycle activities;
- trading;
- custody;
- transfers and settlement;
- investment and advisory services; and
- other digital-asset-related financial activities determined by the Commission.
The rules would apply not only to firms operating physically in Nigeria, but also to businesses providing services to Nigerian residents or targeting Nigerian investors and the Nigerian market through digital channels.
The framework recognises multiple categories of operators, including DAXs, DACs, DAPOs, DAOPs, RATOPs and VASPs.
Depending on their authorisation, VASPs could provide services ranging from order execution and asset transfers to on-ramp and off-ramp services, non-custodial wallet interfaces, staking-related activities, lending, yield products, portfolio management, investment advice and distribution.
The important qualifier is authorisation.
A VASP would only be allowed to perform the activities covered by its specific registration or approval. That means a broad digital-asset business model would not automatically translate into a broad regulatory licence.
The SEC wants a clearer view of transactions
The proposal also pushes digital-asset firms toward much deeper regulatory transparency.
Depending on the SEC’s risk assessment, regulated businesses could be required to provide electronic or API-based access to information covering areas such as transactions, wallets, custody, settlements, finances, risk and compliance.
Operators would also need systems capable of identifying activity involving Nigerian users and monitoring cross-border digital-asset movements.
The framework places additional scrutiny on transactions involving:
- self-hosted or unhosted wallets;
- high-risk jurisdictions;
- privacy-enhancing technologies;
- anonymity-focused digital assets; and
- mixing or tumbling services.
The direction is unmistakable: the regulator wants digital-asset flows to be traceable, attributable and auditable.
Major incidents would trigger rapid reporting
The proposed regime would also shorten the window for notifying the SEC about serious operational problems.
Regulated entities would have to report material events such as significant cyber incidents, system failures, major operational disruptions, loss of customer assets and data breaches.
For certain material cyber and operational incidents, the framework calls for an initial notification within 24 hours, followed by a more detailed report within 48 hours, unless the Commission directs otherwise.
Firms would also have to retain extensive business records—including customer, transaction, wallet, custody, settlement, order, complaint, financial and compliance information—for at least seven years.
For operators, that means compliance cannot sit solely with a legal or regulatory team. Recordkeeping, cybersecurity and incident response have to become core operating functions.
What the proposal could mean for Nigeria’s digital-asset industry
The proposed ₦2 billion capital requirement puts DAXs and DACs at the top of the SEC’s digital-asset capital structure.
But the bigger development is the combination of capital, custody, technology, financial-crime controls and continuous supervision.
For established operators, the framework could raise the cost of competing in Nigeria while creating a clearer regulatory environment for businesses that can meet the requirements.
For smaller firms, the capital thresholds and recurring compliance costs could make independent operation more difficult—or push them toward partnerships, consolidation or narrower business models.
For investors and customers, however, the proposed safeguards could provide stronger protections around asset segregation, custody and operational resilience.
And there is one important caveat: the framework remains a proposal.
The SEC published the rules for stakeholder comments on August 20, 2026, with submissions due within two weeks of publication. The final requirements could therefore differ from the version currently under consideration.
If adopted substantially as proposed, though, Nigeria’s digital-asset market would be entering a new phase—one where having a product and attracting users is no longer enough.
The next competitive advantage may be regulatory strength.
