Nigeria Crypto Industry Pushes Back on SEC’s Proposed ₦2 Billion Capital and 80% Cold Storage Rules
Nigeria’s crypto industry is pushing back against parts of a sweeping new regulatory framework proposed by the country’s Securities and Exchange Commission, arguing that some requirements could make it harder for local firms to compete.
The criticism comes from the Virtual Asset Service Providers Association (VASPA), which submitted formal comments to the SEC on September 5, 2026. While the association supports stronger regulation overall, it wants several provisions revised, including a ₦2 billion minimum capital requirement for digital asset exchanges and custodians and a rule requiring custodians to keep at least 80% of client assets in cold storage.
VASPA outlined its concerns in a formal response to the SEC’s proposed digital asset rules, saying the final framework should protect users without creating barriers that could disadvantage Nigerian operators.
The comments respond to the SEC’s broader Proposed Rules on Digital and Virtual Asset Operations, Custody and Markets, published in August 2026.
SEC Wants Exchanges and Custodians to Hold ₦2 Billion in Capital
Under the draft framework, Digital Asset Exchanges and Digital Asset Custodians would each be required to maintain ₦2 billion in minimum capital.
Other categories would face lower thresholds. Digital Asset Platform Operators, Digital Asset Offering Platforms and Real-World Asset Tokenisation Platforms would each require ₦500 million, while the general Virtual Asset Service Provider category would require ₦200 million, according to the SEC’s proposed rulebook.
The same proposal also sets registration fees for several categories of digital asset businesses, including fees of up to ₦30 million for exchanges, custodians and some platform operators.
VASPA argues that applying the same ₦2 billion requirement to every exchange or custodian could be too rigid, particularly for smaller firms.
In its submission to the regulator, the association called for a more risk-based approach where capital requirements depend on factors such as the size, activities and risk profile of the company.
The industry group pointed to frameworks such as the European Union’s MiCA regime as examples of systems that use more differentiated capital requirements.
The ₦2 Billion Requirement Was Announced Earlier in 2026
The ₦2 billion figure did not appear for the first time in the August proposal.
Nigeria’s SEC had already announced revised minimum capital requirements earlier in 2026. In its January 16 capital framework, the regulator increased the minimum capital requirement for both Digital Asset Exchanges and Digital Asset Custodians from ₦500 million to ₦2 billion.
Affected firms were given until June 30, 2027 to comply.
The SEC said the higher thresholds were intended to strengthen financial resilience, investor protection and the ability of regulated firms to absorb operational and market risks.
VASPA had already raised concerns about the increase. In an earlier analysis of the revised capital rules, the association warned that Nigeria could become an expensive jurisdiction for local crypto businesses seeking to operate under regulation.
The August rulebook therefore expands on an already-announced capital policy rather than introducing the ₦2 billion threshold for the first time.
80% of Client Crypto Would Have to Stay in Cold Storage
The second major area of concern is custody.
Under the SEC proposal, licensed Digital Asset Custodians would be required to hold at least 80% of customer digital assets in cold storage.
Cold storage generally refers to wallets or key-management systems that are kept offline, reducing exposure to online attacks.
The SEC’s proposed custody rules would allow only a smaller portion of customer assets to remain in hot or warm wallets for operational needs such as withdrawals and settlements.
The regulator also proposes controls around wallet limits, monitoring, key management and security.
The aim is straightforward: reduce the amount of customer crypto exposed if an exchange or custodian’s online systems are compromised.
VASPA, however, argues that a fixed 80% threshold could become too restrictive as crypto custody technology develops.
Industry Wants Rules to Recognise New Custody Technologies
VASPA’s objection is not that customer assets should receive less protection.
Instead, it argues that the rules should better account for technologies such as multi-party computation, or MPC, which can distribute control of private keys across multiple systems or participants.
The SEC’s own draft already recognises technologies such as MPC, multi-signature systems, secure enclaves and hardware security modules as acceptable security infrastructure, subject to regulatory standards.
VASPA says this creates room for a more flexible approach.
In its formal commentary, the association recommended that the SEC periodically review the 80% threshold and allow custody methods that can provide security comparable to traditional offline storage.
The argument is that regulation should focus on the security outcome rather than permanently tying custodians to one technical model.
Fees Are Another Major Industry Concern
Capital and custody are not the only parts of the proposal facing criticism.
VASPA has also challenged the SEC’s proposed supervisory fee structure.
Under the draft framework, Digital Asset Exchanges could pay supervisory fees calculated as a percentage of transaction activity. Other regulated entities would also face turnover-based charges, depending on their category.
In a separate submission on fees and registration requirements, VASPA argued that charging fees based on transaction value rather than revenue could hurt businesses that process large volumes but operate on thin margins.
This could be particularly significant for exchanges and market makers.
The association warned that high regulatory costs could encourage some activity to move to offshore exchanges or peer-to-peer markets rather than regulated Nigerian platforms.
VASPA wants the SEC to consider alternatives such as basing supervisory fees on regulated revenue or net trading income, or introducing caps and clearer exclusions.
Multi-Service Crypto Companies Could Face Higher Costs
VASPA has also raised concerns about how the framework could affect companies that offer several crypto services at once.
A Nigerian startup might, for example, operate an exchange while also offering custody and wallet services.
If each activity requires a separate legal entity and a separate capital requirement, the total amount of capital needed could become significantly higher.
In its supplementary submission to the SEC, VASPA asked the regulator to provide clearer rules for companies operating multiple services and to avoid unnecessary duplication of capital requirements.
The industry group argues that firms should be able to separate risks and customer assets without being forced into overly expensive corporate structures.
Stablecoin Rules Could Overlap With CBN Oversight
Stablecoins are another area where the industry wants greater clarity.
VASPA argues that some parts of the proposed framework could overlap with the mandate of the Central Bank of Nigeria, especially where stablecoin issuance, reserves and payment functions are concerned.
The association wants clearer boundaries between the SEC and the CBN so stablecoin operators do not face conflicting or duplicated requirements.
Its formal response suggests the SEC should focus more clearly on stablecoins used as investment products or within SEC-regulated markets.
The concern is not unusual. Stablecoins often sit between securities regulation, payments regulation and banking oversight, making regulatory coordination important.
