NIGERIA Trends and Developments Contributed by: Adeleke Alex-Adedipe, Chika Oke, Jeffrey Nwalima and Christiana Ossai, Duale, Ovia & Alex-Adedipe
A major regulatory milestone has been the revised Open Banking Framework, which man - dates secure data-sharing protocols among financial institutions. This framework facilitates greater interoperability within the banking and fintech sectors, promoting competition, innova - tion, and consumer access to diverse financial products. The CBN aims to expand digital finan - cial services while safeguarding data privacy and security by enabling third-party providers to securely access customer financial data with user consent. Furthermore, the CBN has intensified superviso - ry oversight of digital lenders and payment ser - vice providers, ensuring compliance with ethical lending practices and financial stability require - ments. The regulatory landscape has evolved to accommodate Payment Service Banks (PSBs), which are financial institutions licensed to oper - ate in underserved and rural areas. PSBs have empowered telecommunications firms and fin - tech start-ups to deliver basic banking services to unbanked populations, thereby driving finan - cial inclusion and reducing barriers to accessing formal financial services. The regulator’s overarching emphasis on reduc - ing cash dependency complements Nigeria’s broader economic transformation agenda. It supports digital financial transactions, enhances transparency, and mitigates the risks associated with cash-based economies, such as fraud, tax evasion, and illicit financial flows. SEC’s Digital Asset and Crowdfunding Regulations Recognising the proliferation of investment-relat - ed fintech firms, the Securities and Exchange Commission (SEC) has introduced and enforced policies designed to enhance investor protec - tion and ensure regulatory compliance in capi -
tal market innovations. The SEC Crowdfunding Regulations establish clear guidelines for start- ups and businesses leveraging digital platforms to raise capital. These rules impose compliance obligations on crowdfunding intermediaries, requiring them to implement investor protection measures, maintain transparent disclosures, and prevent fraudulent fundraising activities. The framework ensures that equity crowdfund - ing remains viable for start-ups to access fund - ing while safeguarding investors from potential exploitation. Additionally, the SEC Rules on Digital Assets and Virtual Asset Service Providers (VASPs) outline stringent regulatory requirements for cryptocur - rency exchanges, blockchain-based financial services, and tokenised securities. The SEC mandates virtual asset platforms to comply with rigorous licensing, reporting, and risk manage - ment obligations. By enforcing strict Anti-Money Laundering (AML) and Know-Your-Customer (KYC) standards, the regulatory framework aims to mitigate illicit financial activities while foster - ing responsible innovation within Nigeria’s digital asset ecosystem. Given the growing adoption of cryptocurrency and decentralised financial services, fintech companies operating in this space must align with SEC regulations to ensure compliance, pro - tect investors, and enhance market integrity. Data Protection and Consumer Privacy Compliance Data protection and cybersecurity have become focal points of regulatory enforcement with the increasing digitisation of financial services. The Nigeria Data Protection Act 2023 (NDPA) Nige - ria Data Protection Regulations (2019) imposes stringent compliance obligations on fintech firms, requiring them to implement robust data
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