NIGERIA Trends and Developments Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
isting. High capital requirements serve as a primary vetting mechanism, ensuring that only entities with sophisticated compliance infrastructure can maintain licensure. This is a shift from rule-based compliance to responsibility-based compliance, where the onus is on the firm to prove its resilience. From a supervisory perspective, a well-capitalised firm is better positioned to invest in the advanced technology required for “Travel Rule” compliance (FATF Recommendation 16) and real-time transac- tion monitoring. Regulators increasingly view capital adequacy as a proxy for a firm’s ability to manage anti-money laundering (AML), countering the financing of terrorism (CFT) and counter-proliferation financing (CPF) risks. By raising the financial stakes, the SEC is ensuring that every licensed participant has the opera- tional resources to maintain the high-integrity perim- eter expected by international correspondent banks. Furthermore, these capital buffers serve as a criti- cal mechanism for investor protection. In the event of technical exploits or smart contract failures, a firm with substantial paid-up capital provides a genuine layer of security for user funds. This prudential focus is intended to mitigate systemic risk and prevent the type of retail contagion that could undermine public confidence in the broader Nigerian financial ecosys- tem. The SEC’s 2026 guidelines now require that 25% of this capital be held in highly liquid Nigerian Treasury Bills or SEC-approved instruments, providing a liquid- ity coverage ratio similar to Tier-1 banks. The June 2027 Compliance Deadline: a Catalyst for M&A For existing operators, the most critical date in the current legal calendar is 30 June 2027. This is the hard-stop deadline established by the SEC for all VASPs to meet the revised capital requirements. Firms that were previously operating under the Accelerated Regulatory Incubation Program (ARIP) or older provi- sional licences must now execute a board-approved capitalisation plan, with the first progress report due to the SEC by 30 April 2026. This deadline has triggered an unprecedented wave of strategic consolidation within the Nigerian technology sector. The authors are seeing a significant increase
in mergers and acquisitions (M&A) as smaller, tech- nology-focused firms merge with better-capitalised entities to satisfy the SEC’s mandates. For interna- tional enterprises, this represents a strategic entry window. Global firms are increasingly utilising their balance sheets to acquire locally compliant platforms that have already navigated the ARIP process, thereby bypassing the lengthy organic registration timeline. The consolidation is not merely about survival; it is about scale. In the 2026 market, the National Champi- on model has emerged, where a few highly capitalised exchanges dominate the liquidity pools. This concen- tration of liquidity is viewed positively by institutional investors, such as pension fund managers and insur- ance companies, which require deep market depth to execute the large-scale real-world asset (RWA) entries permitted under the new ISA 2025 framework. The Supervised Evolution: From ARIP to Full Licensure ARIP, which launched in June 2024, served as the bridge to the current regime. ARIP allowed the SEC to live-test the business models of over 50 VASPs in a controlled environment. However, as of early 2026, the ARIP window has largely closed to new entrants, shift- ing the focus towards graduation into full licensure. Participation in ARIP was contingent on several fac- tors that have now become permanent fixtures of the Nigerian VASP landscape: • incorporation and local presence – every VASP must be a Nigerian-incorporated company with a physical office and a resident CEO; • fit-and-proper tests – founders and directors are subject to rigorous background checks by the SEC and the Nigerian Financial Intelligence Unit (NFIU); and • cybersecurity standards – entities must undergo quarterly security audits and maintain a dedicated Security Reserve Fund to mitigate the impact of potential hacking incidents. For firms that successfully transitioned from ARIP, the focus in 2026 has shifted to cross-border interoper- ability. The SEC now requires that any VASP targeting the Nigerian market from offshore must either estab-
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