NIGERIA Law and Practice Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
focused on data integrity. Firms failing to link trans- actions to user TINs face immediate NGN10 million administrative penalties and licence suspension. Following the June 2026 deadline for VASP recapitali- sation, the authors expect the SEC to initiate a market clean-up, forcibly winding down any entity that has failed to meet the capital threshold. The attitude is no longer about prohibiting the indus - try but about institutional gatekeeping, ensuring that only compliant, high-capital and tax-transparent firms remain in the ecosystem. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements Triggers for Mandatory Licensing The licensing trigger in Nigeria is fundamentally activ- ity-based. Under the ISA 2025, any entity providing market infrastructure or intermediary services for digi- tal assets must obtain SEC registration. Key triggers include: • operating a digital asset exchange (DAX) or offering platform (DAOP); • safeguarding or managing private keys on behalf of third parties (digital asset custodians); • facilitating initial digital asset offerings (IDOs) or token generation events (TGEs) targeted at the Nigerian public; • providing brokerage, robo-advisory or portfolio management services involving digital assets; and • platforms facilitating the fractionalisation and sale of real-world assets, such as agricultural commodi- ties or real estate. Territorial Limits and Extraterritorial Reach Nigeria’s jurisdiction is determined by the targeting test rather than the physical location of the server or the entity’s incorporation. To obtain a licence, an entity must be incorporated with the Corporate Affairs Commission as a local sub- sidiary. Furthermore, the SEC requires that at least
four sponsored principal officers, including the CEO and Compliance Officer, be resident in Nigeria. An offshore entity is deemed to be operating in Nigeria if it actively solicits Nigerian residents. The SEC looks for indicia of targeting, such as the following: • providing Nigerian naira/crypto pairs; • advertising on local media or utilising Nigerian influencers; and • where the board or key technical decision-makers are controlled from within Nigeria, the SEC may look through the offshore structure to mandate local registration. Grandfathering and Transitional Provisions The transition to the ISA 2025 and the 2026 recapi- talisation is managed through a bridge-to-licence framework. The Accelerated Regulatory Incubation Program (ARIP) serves as the primary grandfathering mecha- nism. Existing firms were required to undergo an initial assessment to enter this provisional window. Firms relying on ARIP or Approval-in-Principle (AIP) status are subject to stricter oversight than fully licensed entities. These include caps on retail cus- tomer acquisition and the prohibition of promotional activities until full registration is granted. Under Circular 26-1 (January 2026), all existing opera- tors have until 30 June 2027 to meet the revised cap- ital threshold. Failure to comply within this window results in the automatic suspension of operational rights, preventing a permanent grandfathered status Licensing in Nigeria has evolved into a rigorous statu- tory regime under the ISA 2025. Any entity providing digital asset infrastructure or intermediary services must undergo a formal fitness-and-propriety audit by the SEC. The Registration Process The registration process is as follows: for under-capitalised firms. 3.2 Set-Up Requirements Set-Up Requirements
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