On August 20, 2026, the Securities and Exchange Commission (“SEC”) published the Proposed Rules on Digital and Virtual Assets Operations, Custody and Markets (the “Proposed Rules”). The Proposed Rules seek to establish a comprehensive regulatory framework for digital and virtual asset activities in Nigeria, including the issuance, offering, trading, custody, transfer and settlement of digital and virtual assets.
The Proposed Rules set out: the categories of activities to which they apply; the prescribed requirements for conducting business in relation to digital and virtual assets; and regulatory requirements relating to the issuance and trading of digital assets.
In this newsletter, we provide an overview of the key provisions of the Proposed Rules and their potential implication for businesses operating within Nigeria’s digital and virtual asset ecosystem.
Key Provisions and Implication of the Proposed Rules
Where the proposed rules are implemented the following are key provisions that players in the digital and virtual assets space should take note of when operating in the Nigerian market.
1. Application of the Proposed Rules
The Proposed Rules will apply to persons and businesses operating in Nigeria, as well as persons providing services to Nigerian residents or the Nigerian market through digital channels in relation with the issuance, trading, custody and management of digital and virtual assets.
The Proposed Rules will also apply to persons and entities facilitating any aspect of digital and virtual asset services, including Virtual Asset Service Providers (“VASPs”) and Digital Asset Custodians(“DAO”).
2. Obligations of Regulated Entities
Regulated entities are required to comply with various obligations in the conduct of their business and in the issuance, offering, and trading of digital assets in Nigeria. These obligations include, amongst others, the following:
- Advertisement and Promotion: In connection with the issuance and offering of digital assets in Nigeria, entities must ensure that no publication, advertisement, or promotional material is made in respect of a digital asset unless the asset has been duly registered with SEC. Where an entity advertises or promotes a registered digital asset, such advertisement or promotional content must be accurate, fair, and not misleading.
- Changes to the Structure of the Entity: Where there are material changes to the structure or operations of a regulated entity, including changes to its ownership, governance structure, technology architecture, or business model, the entity must obtain SEC’s prior approval before implementing such changes. In addition, any cybersecurity incident, data loss, or loss of assets must be reported to SEC within twenty-four hours of such occurrence.
- Dispute and Conflict of Interest Management: Entities engaged in the trading of digital assets must maintain a comprehensive framework for receiving, handling, and resolving customer complaints. They are also required to establish and maintain appropriate procedures for identifying, managing, and mitigating conflicts of interest arising in connection with their digital asset trading activities.
- System Access and Transaction Monitoring: SEC may require regulated entities to provide API-based access to their financial, operational, and transaction data for regulatory monitoring and supervisory purposes. The Proposed Rules further require entities to implement systems capable of monitoring and reporting transactions involving Nigerian residents. In respect of cross-border transactions, entities must implement systems that maintain designated transaction wallets for domestic and cross-border asset flows. Such systems must also ensure that all inflows into and outflows from Nigeria are traceable to identifiable users.
3. Disclosure Requirements for the Issuance of Digital Assets
The Proposed Rules require the disclosure of all material information relating to a digital asset prior to its issuance. An issuing entity is required to prepare a white paper containing the issuers information, characteristics, offer structure of the digital asset, and other material information to enable prospective investors make informed investment decisions. The whitepaper must be filed with SEC, and the issuing entity must obtain a no-objection or approval from SEC before offering the digital asset to the public.
The issuing entity and its officers will be responsible for any misrepresentation or omission of material information contained in the whitepaper. Where there is a material change to the information relating to the digital asset following SEC’s no-objection or approval, the issuing entity will be required to file a supplementary or amended whitepaper with SEC and suspend further issuance of the digital asset pending compliance with the applicable requirements.
4. Issuance of the Digital Assets
The Proposed Rules provide that, for an asset to be eligible for issuance, the rights and obligations attached to the asset must be clear, the structure of the asset must be transparent, and the risks must be adequately disclosed.
Digital assets shall be categorized either as Asset-Referenced Tokens, Asset-Backed Tokens, or other digital assets, including cryptocurrencies and utility tokens. Assets that are anonymous, exhibit a fraudulent token structure, or constitute an unbacked stablecoin will be prohibited from issuance. The asset must also be offered through a Digital Asset Offering Platform approved by SEC.
5. Registration Under the Proposed Rules
An entity intending to register under the Proposed Rules must apply to first participate in SEC’s Accelerated Regulatory Incubation Programme (“ARIP”). Following an application under the ARIP, SEC may grant the applicant an Approval-in-Principle to commence operations subject to the conditions prescribed by SEC. The Approval-in-Principle will be valid for a period of two years, after which SEC may require the entity to apply for full registration.
SEC may, in certain circumstances, permit an applicant to bypass the ARIP process. This may apply where the applicant is a registered capital market operator, a registered (“VASP”), or a subsidiary of a licensed financial institution.
To qualify for registration under the Proposed Rules, an entity must, amongst other requirements, be incorporated in Nigeria in accordance with the Companies and Allied Matters Act, 2020. Its Chief Executive Officer and other principal officers must be resident in Nigeria, and the entity must maintain a registered office address in Nigeria. The applicant must also satisfy other registration and regulatory requirements prescribed by SEC.
Conclusion
SEC’s objective under the Proposed Rules is to establish a comprehensive regulatory framework for the digital assets market in Nigeria. Notably, the framework extends beyond the regulation of intermediaries engaged in the trading of digital assets to also encompass digital asset issuers and other relevant participants in the digital asset’s ecosystem.
If implemented, the Proposed Rules will have significant implications for foreign entities seeking to issue digital assets in the Nigerian market. Such entities may be required to comply with requirements relating to the incorporation of a domestic entity where the parent company is incorporated outside Nigeria, as well as requirements concerning the residency of principal officers in Nigeria.
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Read the original publication at Pavestones
