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NIGERIA’S PROPOSED RULES ON DIGITAL AND VIRTUAL ASSETS: KEY PROVISIONS AND IMPLICATION FOR BUSINESSES

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BY SEUN TIMI-KOLEOLU & HILLARY OKOROTIE

Introduction 

On August 20, 2026, the Securities and Exchange Commission (“SEC”) published the Proposed Rules on Digital and Virtual Assets Operations, Custody and Markets (the “Proposed Rules”). The Proposed Rules seek to establish a comprehensive regulatory framework for digital and virtual asset activities in Nigeria, including the issuance, offering, trading, custody, transfer and settlement of digital and virtual assets. 

The Proposed Rules set out: the categories of activities to which they apply; the prescribed requirements for conducting business in relation to digital and virtual assets; and regulatory requirements relating to the issuance and trading of digital assets. 

In this newsletter, we provide an overview of the key provisions of the Proposed Rules and their potential implication for businesses operating within Nigeria’s digital and virtual asset ecosystem. 

Key Provisions and Implication of the Proposed Rules 

Where the proposed rules are implemented the following are key provisions that players in the digital and  virtual assets space should take note of when operating in the Nigerian market. 

1. Application of the Proposed Rules 

The Proposed Rules will apply to persons and businesses operating in Nigeria, as well as persons providing services to Nigerian residents or the Nigerian market through digital channels in relation with the issuance, trading, custody and management of digital and virtual assets. 

The Proposed Rules will also apply to persons and entities facilitating any aspect of digital and virtual asset services, including Virtual Asset Service Providers (“VASPs”) and Digital Asset Custodians(“DAO”). 

2. Obligations of Regulated Entities 

Regulated entities are required to comply with various obligations in the conduct of their business and in the issuance, offering, and trading of digital assets in Nigeria. These obligations include, amongst others, the following: 

  1. Advertisement and Promotion: In connection with the issuance and offering of digital assets in Nigeria, entities must ensure that no publication, advertisement, or promotional material is made in respect of a digital asset unless the asset has been duly registered with SEC. Where an entity advertises or promotes a registered digital asset, such advertisement or promotional content must be accurate, fair, and not misleading.
  2. Changes to the Structure of the Entity: Where there are material changes to the structure or operations of a regulated entity, including changes to its ownership, governance structure, technology architecture, or business model, the entity must obtain SEC’s prior approval before implementing such changes. In addition, any cybersecurity incident, data loss, or loss of assets must be reported to SEC within twenty-four hours of such occurrence.
  3. Dispute and Conflict of Interest Management: Entities engaged in the trading of digital assets must maintain a comprehensive framework for receiving, handling, and resolving customer complaints. They are also required to establish and maintain appropriate procedures for identifying, managing, and mitigating conflicts of interest arising in connection with their digital asset trading activities.
  4. System Access and Transaction Monitoring: SEC may require regulated entities to provide API-based access to their financial, operational, and transaction data for regulatory monitoring and supervisory purposes. The Proposed Rules further require entities to implement systems capable of monitoring and reporting transactions involving Nigerian residents. In respect of cross-border transactions, entities must implement systems that maintain designated transaction wallets for domestic and cross-border asset flows. Such systems must also ensure that all inflows into and outflows from Nigeria are traceable to identifiable users.

3. Disclosure Requirements for the Issuance of Digital Assets 

The Proposed Rules require the disclosure of all material information relating to a digital asset prior to its issuance. An issuing entity is required to prepare a white paper containing the issuers information, characteristics, offer structure of the digital asset, and other material information to enable prospective investors make informed investment decisions. The whitepaper must be filed with SEC, and the issuing entity must obtain a no-objection or approval from SEC before offering the digital asset to the public. 

The issuing entity and its officers will be responsible for any misrepresentation or omission of material information contained in the whitepaper. Where there is a material change to the information relating to the digital asset following SEC’s no-objection or approval, the issuing entity will be required to file a supplementary or amended whitepaper with SEC and suspend further issuance of the digital asset pending compliance with the applicable requirements. 

4. Issuance of the Digital Assets 

The Proposed Rules provide that, for an asset to be eligible for issuance, the rights and obligations attached to the asset must be clear, the structure of the asset must be transparent, and the risks must be adequately disclosed. 

Digital assets shall be categorized either as Asset-Referenced Tokens, Asset-Backed Tokens, or other digital assets, including cryptocurrencies and utility tokens. Assets that are anonymous, exhibit a fraudulent token structure, or constitute an unbacked stablecoin will be prohibited from issuance. The asset must also be offered through a Digital Asset Offering Platform approved by SEC. 

5. Registration Under the Proposed Rules 

An entity intending to register under the Proposed Rules must apply to first participate in SEC’s Accelerated Regulatory Incubation Programme (“ARIP”). Following an application under the ARIP, SEC may grant the applicant an Approval-in-Principle to commence operations subject to the conditions prescribed by SEC. The Approval-in-Principle will be valid for a period of two years, after which SEC may require the entity to apply for full registration. 

SEC may, in certain circumstances, permit an applicant to bypass the ARIP process. This may apply where the applicant is a registered capital market operator, a registered (“VASP”), or a subsidiary of a licensed financial institution. 

To qualify for registration under the Proposed Rules, an entity must, amongst  other requirements, be incorporated in Nigeria in accordance with the Companies and Allied Matters Act, 2020. Its Chief Executive Officer and other principal officers must be resident in Nigeria, and the entity must maintain a registered office address in Nigeria. The applicant must also satisfy other registration and regulatory requirements prescribed by SEC. 

Conclusion 

SEC’s objective under the Proposed Rules is to establish a comprehensive regulatory framework for the digital assets market in Nigeria. Notably, the framework extends beyond the regulation of intermediaries engaged in the trading of digital assets to also encompass digital asset issuers and other relevant participants in the digital asset’s ecosystem. 

If implemented, the Proposed Rules will have significant implications for foreign entities seeking to issue digital assets in the Nigerian market. Such entities may be required to comply with requirements relating to the incorporation of a domestic entity where the parent company is incorporated outside Nigeria, as well as requirements concerning the residency of principal officers in Nigeria.

VIRTUAL ASSET SERVICE PROVIDER (VASP) LICENCES IN KENYA & NIGERIA – WHAT YOU NEED TO KNOW

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By Seun Timi-Koleolu, Ombo Malumbe,  Eniola Sogbesan and Faith Ngarama 

 

Introduction

The future of Africa’s digital asset market is no longer speculative. It is real, growing, and increasingly regulated. For founders, Fintechs, and even traditional financial institutions looking to operate in the digital currency space, obtaining a Virtual Asset Service Provider (VASP) license is the price of market entry. In jurisdictions like Nigeria and Kenya—two of the continent’s most active crypto markets—regulators are moving to formalize the ecosystem, protect consumers, and bring operators within a defined legal framework.

However, while both countries are moving in the same direction, their regulatory approaches, licensing processes, and compliance expectations differ in important ways. Understanding these nuances is critical for any business looking to establish or expand operations across either market.

In this newsletter, we examine the licensing requirements, regulated activities, applicable regulatory authorities and other practical considerations for navigating the process successfully.

S/N SUBJECT NIGERIA KENYA
1 Principal Regulator Securities and Exchange Commission Central Bank of Kenya, and Capital Markets Authority
2 License Categories ·       Ancillary Assets Service Providers (AVASPs)

·       Digital Assets Offering Platform (DAOP)

·       Digital Assets Intermediary (DAI)

·       Digital Assets Platform Operator

·       Real-world Assets Tokenization and Offering Platform

·       Digital Assets Exchange (DAX)

·       Digital Assets Custodian

 ·       Virtual Asset Wallet Provider

·       Virtual Asset Exchange

·       Virtual Asset Payment Processor

·       Virtual Asset Broker

·       Virtual Assets Investment Advisor

·       Virtual Asset Manager

·       Virtual Asset Offering Provider (Initial Coin Offering)

·       Virtual Asset Offering Provider (Virtual Asset Tokenization)

·       Virtual Asset Offering Provider (Token Issuance)

·       Virtual Asset Offering Provider (Stablecoin Issuance)

 

3 Permissible Activities Digital Assets Offering Platform This license is used to facilitate fund raising through a digital asset offering via the use of a distributed ledger technology. Virtual Asset Wallet Provider: Services provided by a third party, in which the private keys to the subject’s virtual assets are held and managed by the third party for proof of ownership and facilitation of transactions.

Virtual Asset Exchange: Providing a digital online platform facilitating virtual asset transfers and exchanges. Exchanges may occur between one or more forms of virtual assets, or between virtual assets and fiat currency; or A platform providing for the facilitation of the sale, trading, or exchange of virtual assets for fiat currencies or for other virtual assets.

Virtual Asset Payment Processor: Arranging transactions involving virtual assets and fiat currency, or between virtual assets.

Virtual Asset Broker: Facilitate the exchange between one or more forms of virtual assets through a virtual asset exchange and virtual asset wallet providers for and on behalf of clients, which may include retail, institutional investors, or funds.

Virtual Assets Investment Advisor: Provision of investment advice on virtual assets, initial virtual asset offering and non-fungible tokens for and on behalf of clients, which may include individuals or institutional investors.

Virtual Asset Manager: Managing portfolios in accordance with mandates given by clients on a discretionary basis where such portfolios include one; or more virtual assets.

Virtual Asset Offering Provider (Initial Coin Offering): Issuing and selling virtual assets to the public. May involve participating in and providing financial services relating to the initial coin offering.

Virtual Asset Offering Provider (Virtual Asset Tokenization): The process of converting real-world assets (like real estate, art, or, commodities) into digital token on a blockchain.

Virtual Asset Offering Provider (Token Issuance): Provision of tokenization platform for issuance and secondary trading of tokens of real-world assets.

Virtual Asset Offering Provider (Stablecoin Issuance): The process of creating and managing approved stablecoins.
Digital Assets Intermediary

This license is used to facilitate transactions involving virtual assets such as:

a. execution of orders for virtual assets on behalf of clients;

b. acceptance and transmission of orders for virtual assets on behalf of clients;

c. placing of virtual assets;

d. providing advice on virtual assets investment;

e. providing financial portfolio.
Digital Assets Custodian

This license is suitable for facilitating the safekeeping/holding in custody and/or administration of virtual assets or instruments that enable control over virtual assets.
Digital Assets Exchange

This license is used to facilitate the trading of virtual or digital assets.
The creation of new license categories such as

·       Ancillary Virtual Asset Service Providers (AVASPs)

·       Digital Assets Platform Operators (DAPOs); and

·       Real‑World Assets Tokenization and Offering Platforms (RATOPs).

highlights an area where further regulatory clarity will be required. As there is no existing regulatory framework that expressly identifies the permissible activities that fall within these newly introduced license categories.
4 Share Capital Requirements Ancillary Assets Service Providers (N300 million)

Digital Assets Offering Platform

(N 1billion)

 

Digital Assets Intermediary

(N500 million)

 

Digital Assets Platform Operator

(N500 million)

 

Real-world Assets Tokenization and Offering Platform

(N 1 billion)

 

Digital Assets Exchange

(N 2 billion)

 

Digital Assets Custodian

(N2 billion)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Virtual Asset Wallet Provider

(KSH 150 million)

 

Virtual Asset Exchange

(KSH 150 million)

 

Virtual Asset Payment Processor

(KSH 50 million)

 

Virtual Asset Broker

(KSH 30 million)

 

Virtual Assets Investment Advisor

(KSH 2.5 million)

 

Virtual Asset Manager

(KSH 30 million)

 

Virtual Asset Offering Provider (Initial Coin Offering)

(KSH 200 million)

 

Virtual Asset Offering Provider (Virtual Asset Tokenization)

(KSH 200 million)

 

Virtual Asset Offering Provider (Token Issuance)

(KSH 200 million)

 

Virtual Asset Offering Provider (Stablecoin Issuance)

(KSH 500 million)
5 Corporate

Governance

Requirements

 All VASPs must have a minimum of five (5) directors, three (3) of whom must be Nigerian.

Also, the board of each VASP must comprise of the following committees

·       Nomination and Governance

·       Remuneration

·       Audit and Risk Management

 The Board of Directors will constitute at least three (3) members.

 

Structure:

·       1/3 must be independent directors.

·       Not more than 1/3 shall be related to any director.

·       The Board’s chairperson shall not be appointed as the Chief Executive Officer (CEO).
6 Investment Thresholds High Networth Individuals

(No restriction)

 

Angel Investors

(maximum of N50 million per issuer within a 12-month period)

 

Retail Investors

(maximum of N1million per issuer not exceeding N10 million within a 12-month period)

 There are yet to be any restrictions on Investment Thresholds. However, this does not limit such limits being applied as per the applicable laws more so from the Capital Markets Authority’s side.

 Conclusion

Securing a Virtual Asset Service Provider (VASP) license in Nigeria or Kenya is no longer simply a regulatory requirement but a strategic step toward building a credible and sustainable digital asset business. While both jurisdictions are actively developing their frameworks, they each present distinct requirements and regulatory expectations that must be carefully navigated. Businesses looking to operate in either market must take a proactive approach to compliance, ensuring that their structures, governance, and operational models align with the applicable rules from the outset.

Ultimately, success in this space will depend not only on obtaining a VASP license, but on maintaining ongoing compliance in an evolving regulatory environment. As regulators continue to refine their approach to Virtual assets, businesses that prioritize transparency, strong internal controls, and regulatory engagement will be best positioned to scale confidently. For prospective entrants, understanding the regulatory landscape early and preparing accordingly will make the difference between a smooth market entry or costly delays.