NIGERIA’S FINANCIAL MARKETS REFORM – THE VIRTUAL ASSETS COORDINATION EXECUTIVE ORDER 2026 AND SEC’S PROPOSED CROSS-BORDER TRADING RULES

BY SEUN TIMI-KOLEOLU & ENIOLA SOGBESAN

Introduction

Nigeria continues to take significant steps towards modernizing its financial markets by creating a more transparent, innovative and globally competitive investment ecosystem. Two recent developments reflect this direction: the Presidential Executive Order on Virtual Assets Coordination 2026 (the “Executive Order”) and the Securities and Exchange Commission’s (SEC) Proposed Rules on Cross-Border Securities Trading and Custody (the “Proposed Rules”). Although they address different segments of the financial market, both initiatives are aimed at strengthening Nigeria’s regulatory framework, inter-agency coordination, and supporting responsible innovation.

In this newsletter, we examine the key highlights of these developments and their implications for investors, capital market operators, fintech companies and other stakeholders. We also consider how these reforms fit into Nigeria’s broader efforts to align its financial/capital markets with international best practices while encouraging growth, protecting investors and enhancing regulatory coordination.

1. The Presidential Executive Order on Virtual Assets Coordination 2026
   President Bola Ahmed Tinubu on July 17, 2026 signed the Presidential Executive Order on Virtual Assets Coordination, 2026 (the “Executive Order”). The Order which takes effect immediately, is a response to a largely fragmented regulatory landscape that has exposed Nigerians to unchecked losses from unregulated operators. The Executive Order aims to protect investors while promoting responsible innovation and preserving financial system integrity.Key Highlights of the Executive OrderIt is important to note that the Executive Order does not establish a new regulator but rather establishes a mechanism for coordination amongst existing regulators such as SEC, Central Bank of Nigeria (CBN), Nigeria Revenue Service (NRS), Nigerian Financial Intelligence Unit (NFIU) and Office of the National Security Adviser (ONSA). The key highlights of the Executive Order include-

• the establishment of a Virtual Asset Council (the “Council”) chaired by the CBN Governor, with the Director-General of the SEC and the Chairman of the Nigeria Revenue Service serving as Vice-Chairs;
• the establishment of a Virtual Asset Office (VAO) to serve as the operational arm and secretariat of the Council;
• a functional allocation of regulatory responsibilities among regulators –

1. 1. 1. SEC – regulation of virtual assets that constitute securities and investment products;
      2. CBN – supervision of payment, settlement, custody and other non-security virtual asset activities within its statutory mandate;
      3. NRS – issue a specialized tax policy for the taxation of virtual assets;
      4. NFIU – oversight for AML/CFT compliance
      5. ONSA – coordination of national security and intelligence.

• the establishment of a dedicated CBN regulatory sandbox for virtual asset and blockchain-based innovation.Implications and Opportunities for Virtual Asset Service ProvidersThe Executive Order signals a more coordinated regulatory framework for virtual assets, with clearer allocation of responsibilities among regulators and stricter oversight of anti-money laundering and counter-terrorism financing (AML/CFT) standards. Virtual Asset Service Providers (VASPs) should also monitor opportunities to participate in the CBN’s proposed regulatory sandbox, as well as anticipated tax guidance from the Nigeria Revenue Service (NRS). Collectively, these developments are expected to provide greater regulatory certainty for compliant operators while potentially increasing enforcement against operators that do not meet the applicable regulatory requirements.

  As of the date of this newsletter, we note that the official text of the Executive Order has not been publicly released, and we expect it to be released shortly. Once published, a detailed review of its provisions will be necessary to assess its implications for VASP’s and other participants in Nigeria’s digital asset ecosystem.

B. Proposed Rules On Cross-Border Securities Trading and Custody
The Securities and Exchange Commission (SEC) on July 2, 2026 published a draft of its “Proposed Rules on Cross-Border Securities Trading and Custody” (the “Proposed Rules”). The Proposed Rules represent a significant step by the SEC towards establishing a comprehensive regulatory framework for Nigerian investors’ wishing to invest in foreign securities. The Proposed Rules seek to regulate the provision of cross-border securities trading services by SEC-registered brokers, while strengthening investor protection, enhancing regulatory oversight, and promoting the integrity of cross-border investment activities.

1. Scope/Applicability
   The Proposed Rules are applicable to every broker licensed by the SEC that provides Nigerian investors access to foreign securities listed or traded on a foreign securities exchange. More specifically, the Proposed Rules applies to the following services –

1. 1. trading in foreign securities on behalf of Nigerian investors;
   2. execution of cross-border securities transactions through foreign intermediaries;
   3. custody and safekeeping of foreign securities belonging to Nigerian investors;
   4. maintenance of records of beneficial ownership of foreign securities; and
   5. the protection of investor rights and assets within indirect holding structures.

2. Licensing Requirements
   Under the Proposed Rules, a broker is prohibited from providing cross-border securities trading services without first obtaining a prior “No Objection” from the SEC.To obtain a No Objection from the SEC, a broker must submit an application which include but not limited to the following documents –

1. 1. detailed description of the proposed cross-border trading services;
   2. identification of foreign exchanges to which access shall be provided;
   3. details of foreign brokers and custodians to be engaged;
   4. description of custody and settlement arrangements; and
   5. policies governing safeguarding of client assets.

The Proposed Rules clearly prohibit a broker from facilitating foreign securities trading, unless it maintains a minimum net liquid capital of not less than ₦2 billion.

3. Approval Requirements for Foreign Brokers?
   Prior to engaging in foreign securities transaction through a foreign broker, a Nigerian broker shall ensure that the foreign broker satisfies the following conditions –

1. 1. the foreign broker must be licensed and supervised by a securities regulator;
   2. it must operate within jurisdictions that are members of the International Organization of Securities Commissions (IOSCO) and whose regulator is a signatory to the IOSCO Multilateral Memorandum of Understanding or any other cooperation arrangement with the SEC;
   3. it must maintain adequate financial resources, operational capacity, custody safeguards, and client asset protection mechanisms;
   4. where applicable, it is a participant in recognized clearing and settlement systems; and
   5. the foreign broker is not subject to any material regulatory sanction, restrictions, suspension, or enforcement action that may impair its operations or expose investors to undue risk.

4. Regulatory Assessment and Recognition of Foreign Brokers
   Under the Proposed Rules, a broker shall not enter any arrangement or any other business relationship with a foreign broker for the purpose of providing cross-border securities trading without the prior approval or a “No Objection” of the SEC.An application for approval to engage a foreign broker shall be accompanied by the following:

1. 1. the proposed agreement between the foreign and Nigerian broker;
   2. details of the services to be provided by the foreign broker;
   3. details of custody, clearing, settlement, and operational arrangements;
   4. evidence of the foreign broker’s licensing and regulatory authorization status;
   5. a status report, letter of good standing, or fit and proper confirmation issued by the foreign broker’s regulator and
   6. such other information as the SEC may require.

5. Investor Protection
   The Proposed Rules require every foreign security purchased on behalf of a Nigerian investor to be held by a regulated foreign custodian or clearing participant. Also, all securities purchased by an investor must be segregated from the assets of the broker or custodian.Under the Proposed Rules, every broker is required to ensure that –

1. 1. proper books and records are maintained to clearly distinguish the assets of each investor from the assets of the broker;
   2. no investor asset is utilized for the benefit of the broker or any other investor without the prior written authorization of the affected investor client and the approval of the SEC, where applicable; and
   3. adequate systems and controls are established to ensure the continuous protection, reconciliation, and traceability of client assets.

6. What are the reporting obligations of Brokers under the Proposed Rules?The Proposed Rules require a broker to submit quarterly reports to the SEC. The details of the report shall include the following –
   
   1. 1. aggregate value of foreign securities held by Nigerian investors;
      2. custody locations of such securities; and
      3. reconciliation statements.
7. Fees and Sanctions.The SEC shall be entitled to a fee 0.35% on the purchase of every foreign security by a Nigerian investor and this fee may be reviewed by the SEC from time to time. Upon collecting the fee, the Broker shall submit monthly transaction returns and fee remittance reports to the SEC in the form and manner prescribed by the SEC including reconciliations of transactions executed through foreign intermediaries.Where a broker fails to comply with the Proposed Rules, such broker shall be subject to sanctions such as suspension, monetary penalties, revocation of registration and any other sanction that the SEC may impose.

   Conclusion

   The Virtual Assets Coordination Executive Order 2026 and SEC’s Proposed Rules on Cross-Border Trading of Foreign Securities and Custody, represent important milestones in Nigeria’s efforts to strengthen the regulatory architecture of its financial markets. While the Proposed Rules is still in its draft form, it seeks to provide a structured framework for access to foreign securities, and the Executive Order enhances regulatory coordination for virtual assets. Together, these developments reflect a broader policy objective of positioning Nigeria’s financial markets to support innovation while aligning with international regulatory standards.