NIGERIA Law and Practice Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
Professional gating High-frequency trading, market making, and asset management are reserved for institutional entities that meet the NGN2 billion capital requirement. The “line” is drawn at the point of custody and intermedia- tion: any entity holding third-party assets or facilitating trades for a fee is treated as a professional operator subject to full SEC/CBN oversight. New Regulations: the Next 12 Months (2026–2027) The focus is moving from rule-making to active super- vision. • Mandatory AML/CFT supervision – the CBN’s 2026 Pilot Scheme is expected to transition into a permanent, mandatory supervisory framework for all VASPs. This will introduce real-time Travel Rule reporting as a non-negotiable operational standard. • Recapitalisation deadlines – firms currently operat- ing under temporary approvals have until 30 June 2027 to fully meet the revised NGN2 billion capital threshold or face mandatory exit from the market. 2.3 Regulated Firms and Legal Wrappers Impact of Legal Wrappers on Regulatory Obligations Utilising a legal wrapper, such as a collective invest- ment scheme (CIS) or a private equity fund, does not exempt the activity from SEC oversight. In fact, it intensifies it. Under the ISA 2025, the SEC applies a look-through approach. If the underlying assets of a fund are digital assets, the fund is characterised as a digital invest- ment fund. The fund itself must be registered as a specialised CIS, and the fund manager must hold a specific SEC licence to manage digital assets. The wrapper simply moves the compliance burden from the activity level to the entity level. Regulatory Consequences for Exposure For regulated firms and funds, exposure to digital assets, whether direct or via a wrapper, triggers strin- gent prudential and conduct-of-business require- ments.
Specific Regulatory Frameworks The landscape has shifted from a circular-based regime to a statutory regime. The primary pillars are: • ISA 2025 – the foundational statute that codifies digital assets as securities; • SEC Digital Asset Rules (amended June 2025) – these provide the operational requirements for issuance, custody and exchange platforms; and • CBN VASP Guidelines (2024) – govern how finan- cial institutions facilitate fiat-to-crypto transactions. Regulated and Prohibited Activities Regulated activities The scope of regulation is comprehensive, covering: • issuance and initial offerings – all digital asset offerings must be registered with the SEC; • market infrastructure – operations of digital asset exchanges (DAX) and offering platforms (DAOP); • custodial services – specialised licensing is required for digital asset custodians (DAC); and • advisory and portfolio management – managing digital asset portfolios for third parties. Prohibited activities • Unlicensed intermediation – operating any exchange or custodial service without an SEC licence (or an active Approval-in-Principle under ARIP) is strictly prohibited. • Anonymous trading – platforms that fail to imple- ment mandatory identity-linking (TIN/NIN) for all wallets are subject to immediate blocking and licence revocation. • Crypto-as-legal-tender – while legal to trade as property, crypto-assets cannot be used as a substitute for the naira for the settlement of public debts or as a sovereign currency. Retail or Professional Markets Nigeria does not draw a rigid legislative line between retail and professional investors but rather between licensed operators and unregulated participants. Retail participation Individual retail users may trade freely through SEC- licensed VASPs.
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