Nigeria's crypto industry kick against SEC’s updated crypto capital rule

The Securities and Exchange Commission (SEC) of Nigeria has released an updated policy on its crypto capital rule. In its statement, it updated the requirement to two billion naira.

The agency claimed the move was made to improve investor protection and align Nigeria with global cryptocurrency standards.

The compliance deadline set at June 30, 2027 for the increased capital requirement could force smaller firms to merge while others exit the market permanently.

SEC shakes up Nigerian crypto industry with new crypto capital rule

According to the SEC, the changes reflect the increase in funds managed by digital platforms in the country. It also noted that it is expected to reduce systemic risks in a market where operator failure could have bigger consequences, especially for users.

In its statement, the agency noted that firms that fail to meet its deadline risk sanctions, which would include suspension or withdrawal of registration. The increased capital means that only firms with sufficient financial depth are allowed to operate.

Aside from its financial angle, the SEC also mentioned that these firms are expected to provide sufficient governance structures and good risk management systems in an industry that is consistently exposed to fraud, volatility, and cross-border flows.

The stance was received well by some of the veterans in the Industry. For instance, Demola Aladekomo, chairman and founder of CHAMS Plc, noted that the move was timely. He noted that it was also necessary for the crypto population in the country.

“The business of crypto is global. It is going on whether we like it or not. We must commend the SEC for being very proactive in ensuring that we get into it with proper regulation,” Aladekomo said. When asked about his views on the N2 billion requirement, he noted that it was good, considering the risk in crypto operations. Aladekomo added that capital is only the first layer of scrutiny.

According to the CHAMS CEO, the licensing process also involves checks on systems and security. He said it still includes other requirements like know-your-customer requirements for directors, technology deployment, provisional approvals, and post-licensing audits.

“If smaller players are serious about operating, they should look at mergers or acquisitions,” he said. For operators already in the system, the new rules are tougher, but unavoidable.

Moyo Sodipo, chief operating officer of Busha, a SEC-provisionally licensed crypto exchange, mentioned that the updated capital requirements show a strict assessment of risks and market integrity. The increased capital requirements signal a stricter regulatory assessment of risk and market integrity in the digital asset space,” Sodipo said.

He added that Busha would continue to dialogue with the regulator and push for “fair and proportionate rules that support a healthy, sustainable ecosystem.”

However, critics feel the rules risk stifling innovation. Obinna Iwuno, chief executive of CBC Blockchain Services, mentioned that the new requirement is excessive and globally uncompetitive.

“Increasing capital requirements to N2 billion makes Nigeria the most expensive jurisdiction in the world for a crypto license. And yet Nigeria is not even among the top 10 markets in the world in terms of liquidity and volume,” he asserted.

He added that the policy would kill the Nigerian market and eliminate local players.

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