The Securities and Exchange Commission of Nigeria (SEC Nigeria) has put forth a proposal to increase the minimum paid-up capital requirement for virtual asset service providers (VASPs) to ₦1 billion (~$675,200). This figure represents double the previously suggested requirement of ₦500 million.
The @SECNigeria proposes doubling the required minimum paid up capital as part of the proposed major amendment to the rules on issuance, offering platforms and custody of digital assets to stakeholders and the general public pic.twitter.com/UTdhOMpKqy
— BitKE (@BitcoinKE) March 20, 2024
The paid-up capital requirement encompasses bank balances, fixed assets, or investments in quoted securities. Virtual asset service providers encompass a range of entities such as:
Cryptocurrency exchanges
Peer-to-peer platforms, and
Over-the-counter (OTC) desks
In addition to the minimum paid-up capital of ₦1 billion, virtual asset companies must also furnish a current Fidelity Bond that covers at least 25% of the minimum paid-up capital.
The commission also increased the number of additional documents required for registration. The new rules require ‘a sworn undertaking that the applicant will be able to operate an orderly, fair, and transparent market in relation to the securities including derivatives that are offered or traded, on or through its platform.’
VASPs will also need to be incorporated in Nigeria and maintain a physical office within the country, the CEO or managing director of these companies must reside in Nigeria, ensuring a local presence and accountability.
The proposed amendments also extend to foreign or non-residential operators that directly target Nigerian users or engage with them through their agents.
However, the SEC has clarified that certain entities, such as tech firms offering infrastructure or software to digital asset exchanges, and financial portals aggregating content and providing links to financial sites, are exempt from these rules.
The timing of these proposed amendments coincides with Nigeria’s efforts to have more control over foreign crypto exchanges which authorities believe have played a role in the rapid depreciation of the local currency. Local authorities are still holding on to Binance executives as part of its crackdown on the crypto exchange.
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— BitKE (@BitcoinKE) March 13, 2024
Stakeholders and industry participants have been given a window to provide feedback on these proposed amendments.
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