Posted by Senator Ihenyen, Lead Partner at Infusion Lawyers and currently Executive Chair of the Steering Committee of the Virtual Asset Service Providers Association (VASPA).
As the first dust settles on the Nigerian Securities and Exchange Commission (SEC) Circular No. 26-1 outlining new minimum capital requirements for capital market operators (CMOs), a troubling picture is beginning to take shape.
Virtual Asset Service Providers (VASPs) are currently classified as CMOs, and a comparison with global digital asset regulatory regimes shows that Nigeria’s new minimum capital requirement of ₦2 billion (approximately $1.4 million) for Digital Asset Exchanges (DAX) is not only high, but also ranks as one of the most restrictive in the world. This raises concerns that the policy will end up constraining the local capacity and resilience that the government should encourage to maintain Nigeria’s competitiveness in this rapidly evolving sector.
Regulation | SEC Nigeria increases minimum capital requirements, raises standards for crypto, fintech and capital market operators
The great disconnect: Nigeria vs. the world
When viewed side-by-side with established global hubs, Nigeria’s “capital strip” strategy begins to look less like a security buffer and more like a formidable barrier to entry.
Jurisdictional License Category Minimum Capital Requirement (approx. USD) European Union (MiCA 2026) Crypto Asset Service Provider (CASP) $54,000 – $163,000 (€50,000 – €150,000) Hong Kong (SFC) Virtual Asset Trading Platform (VATP) $640,000 (HK$5 million paid) Mauritius / El Salvador VASP / DASP Various (High/Low Competitive) South Africa FSCA No minimum amount (based on financial soundness and liquidity) Nigeria (SEC 2026) Digital Asset Exchange (DAX) $1,400,000 (₦2 billion)
Under the European Union’s innovative Market for Cryptoassets (MiCA) framework, companies can obtain licenses to operate in 27 countries at a fraction of the cost of setting up in Nigeria alone. While SEC Nigeria maintains that such capital levels are necessary to ensure “resilience,” many stakeholders, including myself, argue that the Nigerian market, although high in penetration, is still in its infancy in terms of institutional depth.
Analytical Insights: The Capacity Conundrum
At the heart of the industry backlash is a unified concern reflected in a public statement by the Blockchain Industry Coordination Council of Nigeria (BICCoN), the general representative of Nigeria’s blockchain ecosystem.
The central message is clear. In the early stages of development, if entry criteria are set from the outset at fully mature institutional levels, then Nigeria lacks the local institutional capacity to compete globally.
Three key concerns stand out.
A stuffy domestic “unicorn”
By requiring $1.4 million in paid-in capital, the SEC appears to be asking for a finished product rather than fostering growth. Most of today’s global exchanges started small before expanding to scale. But in Nigeria, these “small” innovators are at risk of legal extinction.
Advantages of “overseas giants”
Such high hurdles effectively roll out the red carpet for well-capitalized foreign companies, while leaving local innovators with technical expertise but without billions of dollars in liquid capital sidelined. The result could be a digital economy completely dominated by external players.
Capital intensity and market realities
Unlike traditional financial institutions, crypto startups are fundamentally technology-driven. Their financial needs are related to research, development and security, not idle funds sitting in paid-up accounts. Being forced to keep $1.4 million dormant is a death sentence for many startups.
premature and commercially unjustified
If Nigeria were a fully developed financial market like New York or London, such a requirement might be defensible. But in an emerging ecosystem, it represents a mismatch. Indeed, this disparity may even deter ‘foreign giants’ and encourage them to seek more commercially viable jurisdictions. Regulators need to recognize this economic reality, as well-intentioned policies can still produce unintended consequences. Nigeria needs a more balanced way forward.
A path to constructive progress
To foster a truly competitive industry, the SEC should consider a comprehensive tiered licensing framework.
Tier 1 (Startup)
Lower capital requirements for companies with limited trading volumes.
Tier 2 (growth)
Capital increases incrementally as a company expands its operations.
Tier 3 (Organization)
The full £2bn required for an exchange that handles large public retail trading volumes.
This phased approach can be extended to other license categories as well. This would allow markets to develop organically while managing risk, rather than suffocating innovation under excessive, even unintentional, capital demands.
See also
These views are consistent with the positions of industry associations and professional bodies across Nigeria, all of which emphasize the importance of regulators truly listening to stakeholders. Cooperation, cooperation and comprehensive consultation in policy-making are essential not only to protect markets but also to build trust and ensure smooth compliance.
Without a ladder like the one being proposed, Nigeria risks winning the battle for “stability” but losing the battle for “innovation.” By the time the June 2027 deadline arrives, we could be left with a “stable” market without enough local players, or even enough foreign ones, to sustain it.
If regulation is truly meant to serve consumers and investors rather than bureaucracy and red tape, Nigeria needs to create a globally competitive environment that allows access to cutting-edge financial innovation.
Regulation | IMF warns of rapid increase in Nigeria’s cryptocurrencies as a threat to exchange stability and capital controls – calls for “immediately an enforceable legal framework”
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This post has been edited from this original post.
