NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
10.6 Staking While staking services are not specifically addressed in Nigerian laws, they are regulated under the broader framework for digital assets and VASPs and fall under the regulatory frame - work established by the SEC and the CBN. VASPs are entities that facilitate the exchange, trading, transfer, or other services involving vir - tual assets. Entities that wish to operate legally in the stak - ing services sector must register with the SEC, obtain the necessary license, and comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations. They are also required to fulfill reporting obli - gations, which include disclosing information about their operations, directors, and beneficial owners. The regulatory environment is evolving, and the CBN, which initially prohibited banks from facili - tating cryptocurrency transactions in 2021, has since relaxed its stance. In December 2023, the CBN allowed financial institutions to open bank accounts for crypto businesses, provided they comply with SEC licensing requirements. 10.7 Crypto-Related Lending The provision of lending services relating to cryptocurrencies is regulated in Nigeria. SEC regulates such activities under its Digital Assets Rules. These rules broadly define virtual assets as digital representations of value used for payment, trading, or investment purposes and establish the framework for regulating VASPs. Lending services involving cryptocurrencies fall within the broader scope of VASPs, subject to licensing and registration requirements under the SEC’s framework. This includes compliance with anti-money laundering (AML) and know-
your-customer (KYC) standards, reporting obli - gations, and other operational guidelines. 10.8 Cryptocurrency Derivatives The offering of cryptocurrency derivatives is regulated in Nigeria under the Digital Assets Rules. These rules define virtual assets as “a digital representation of value that can be trans- ferred, digitally traded and used for payment or investment purposes.” The regulation introduces various categories of VASP, each with specific registration and licensing requirements. Entities involved in offering cryptocurrency derivatives must register with the SEC and com - ply with the regulatory framework outlined in the Digital Assets Rules. This includes adherence to anti-money laundering (AML) and know-your- customer (KYC) requirements, as well as other operational and reporting obligations. The SEC’s framework aims to ensure that all digital asset market participants operate within a regulated environment to protect investors and maintain market integrity. 10.9 Decentralised Finance (DeFi) There are currently no specific laws or regula - tions governing DeFi in Nigeria. However, the authors are mindful that the operations of DeFi platforms are likely to be treated as those of a VASP under the Digital Assets Rules. 10.10Regulation of Funds The Digital Aset Rules provide limits on funds to be raised by an issuer. Specifically, the maximum quantum of funds an issuer may raise within any 12-month period is NGN10 billion or 20 times the issuer’s shareholders’ funds (whichever is lower). The issuer is also required to demonstrate that the gross proceeds to be raised would be suf - ficient to undertake the project as proposed in the White Paper.
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