NIGERIA Law and Practice Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
5.2 DeFi Structures Under Nigeria’s ISA 2025, DeFi does not have a bespoke corporate framework. The regime is designed for centralised intermediation, requiring a primary accountable entity for all licensed activities. Corporate Structure and DAOs DAOs are not recognised as distinct legal entities under the CAMA 2020. To operate legally, DeFi pro- moters typically wrap their protocols in a private lim- ited company to interface with the SEC. The SEC’s 2026 enforcement posture mandates that every platform have a board of directors and resident principal officers. Purely algorithmic, ownerless pro- tocols currently cannot satisfy these statutory fit-and- proper requirements. Set-Up and Capital Requirements Any DeFi structure functioning as an exchange or custodian must register as a VASP. This requires a Nigerian subsidiary with a resident CEO. Under the 2026 Prudential Guidelines, structures acting as exchanges or custodians must provide evi- dence of NGN2 billion in paid-up capital and a fidelity bond covering 25% of that amount. Founders often utilise ARIP to test decentralised models. However, ARIP requires a corporate appli- cant, making the wrapper structure a non-negotiable prerequisite for legal entry. 5.3 Liability Regulators and courts apply a project promoter liabili- ty model. Under the ISA 2025, the SEC ignores decen- tralisation as a shield, holding identifiable developers, local marketing agents or CeFi intermediaries strictly accountable for consumer harm. Enforcement cen- tres on unauthorised intermediation, with the SEC and EFCC utilising asset freezes and administrative fines to penalise promoters of failed or fraudulent protocols.
The regulatory gap Because decentralised protocols lack a central man- agement body, a resident board or the NGN2 billion in paid-up capital required by the SEC as of 2026, they cannot satisfy the criteria for licensing. Unauthorised offering risk Although individuals may technically use DeFi pro- tocols, any platform that actively targets Nigerian residents, evidenced by localised marketing or nai- ra-paired liquidity pools, risks being classified as an unauthorised exchange, exposing developers or local promoters to administrative penalties and potential criminal prosecution under the ISA 2025. CeFi Utilisation of DeFi Centralised finance (CeFi) firms are not expressly permitted to integrate DeFi protocols into their retail products. If a licensed CeFi firm uses DeFi for yield-generation or liquidity, the SEC requires full disclosure of smart contract risks. The licensed firm remains the primary guarantor of user funds; protocol failure or smart con- tract exploit is not a valid legal defence for the loss of client assets. The primary hurdle for CeFi-DeFi integration is FATF Recommendation 15. Under the CBN’s 2026 AML/ CFT/CPF Supervision Pilot Scheme, licensed firms must identify the originator and beneficiary of every transfer. Because most DeFi protocols are permission- less and do not support the automated transmission of identity data, CeFi firms cannot satisfy the 2026 Pilot Scheme’s mandatory screening requirements, making large-scale DeFi integration a high-risk regu- latory activity. For institutional clients, the authors emphasise that while DeFi remains technically accessible the 2026 compliance burden for any bridging activity is pro- hibitive. The regulatory trend is towards accountable intermediation, where any firm providing access to DeFi yields must treat that protocol as a third-party service provider subject to full SEC-standard due dili- gence.
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