For years, Nigeria’s crypto industry asked for one thing: clear regulation. Founders wanted legal certainty, investors wanted stronger protections, and legitimate businesses wanted a framework that would allow them to operate without constantly worrying about policy reversals.
That framework is finally taking shape. The Securities and Exchange Commission (SEC) has assumed oversight of digital asset businesses under the Investments and Securities Act (ISA) 2025, bringing cryptocurrencies and Virtual Asset Service Providers (VASPs) into Nigeria’s regulated financial system.
However, as the licensing process unfolds, a new debate is emerging. While many operators agree that regulation is necessary, some believe the cost and complexity of meeting the SEC’s requirements could make it difficult for smaller startups to survive.
One of the biggest talking points is the reported ₦2 billion minimum capital requirement for certain categories of digital asset operators. Although the requirement is intended to ensure only financially sound companies manage customer assets, several founders argue that such a threshold could discourage innovation by placing compliance beyond the reach of early-stage businesses.
The discussion gained momentum after fintech executive Femi Adegolu questioned whether the framework was practical for startups. According to him, many of Nigeria’s most successful fintech and crypto companies began with limited resources, growing gradually as they found product-market fit. Requiring companies to meet a high capital threshold before they can fully operate, he argued, risks favouring large, well-funded firms while making it harder for new entrants to compete.
The debate goes beyond the capital requirement alone. Documents shared with prospective VASP applicants show that the SEC expects companies to demonstrate not only financial strength but also operational maturity before they can obtain a licence.
What the SEC requires from crypto businesses
According to the Commission’s licensing assessment, applicants are expected to submit detailed information covering virtually every aspect of their operations, including:
– Updated Corporate Affairs Commission (CAC) records and MEMART reflecting proposed VASP activities.
– A detailed explanation of the company’s business model, including whether it operates as an exchange, broker, over-the-counter (OTC) desk, peer-to-peer platform, custody provider or settlement intermediary.
– The number of active customers and customer segmentation.
– Historical transaction volumes and monthly transaction values.
– A list of all supported cryptocurrencies and stablecoins.
– Details of wallet architecture, custody arrangements and private key management.
– Banking relationships and Naira settlement processes.
– Evidence of registration with the Nigerian Financial Intelligence Unit (NFIU).
– Anti-money laundering (AML) and counter-terrorism financing (CFT) policies.
– Politically Exposed Person (PEP) screening and sanctions screening procedures.
– Travel Rule compliance and suspicious transaction reporting processes.
– Transaction monitoring systems.
– Cybersecurity controls, disaster recovery plans and business continuity frameworks.
– Consumer protection policies, customer disclosures, complaint handling procedures and fee schedules.
– Capital plans and fidelity bond arrangements.
– A written undertaking that the company will not expand into additional regulated digital asset activities without first obtaining the SEC’s approval.
Beyond reviewing documents, the SEC may also require applicants to participate in technical demonstrations to assess their trading systems, custody infrastructure, compliance controls, cybersecurity measures and operational readiness before granting a licence.
For many established financial institutions, these requirements may appear standard. Similar expectations exist in jurisdictions such as the European Union, Singapore and the United Arab Emirates, where regulators require crypto firms to meet strict governance, cybersecurity and anti-money laundering standards.
The concern among some Nigerian founders is that startups often lack the financial and operational resources available to larger companies. Building secure custody infrastructure, maintaining robust compliance teams and meeting significant capital thresholds can require substantial investment long before a company begins generating sustainable revenue..
From the SEC’s perspective, the tougher standards are designed to protect investors and improve confidence in Nigeria’s digital asset market. The global crypto industry has witnessed exchange failures, fraud, hacking incidents and money laundering cases over the past few years, prompting regulators worldwide to demand stronger governance and better risk management from companies handling customer funds.
The Commission’s approach also aligns with international recommendations from the Financial Action Task Force (FATF), which encourages countries to regulate virtual asset service providers through licensing, effective supervision and strong AML/CFT controls.
The challenge now is striking the right balance
If compliance requirements become too demanding, smaller innovators may relocate to more startup-friendly jurisdictions or remain outside the regulated system. On the other hand, lowering the bar too much could expose investors to unnecessary risks and undermine confidence in the sector.
Nigeria has taken an important step by giving digital assets a formal legal framework. The next test will be determining whether that framework can achieve two goals at once: protecting consumers while still leaving room for startups to build the next generation of crypto products.
How the SEC responds to industry feedback in the coming months could shape not only the future of crypto regulation in Nigeria but also whether the country’s reputation as one of Africa’s most active digital asset markets continues to grow.
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