What changes? The Nigerian SEC wants cryptocurrency firms to store 80% of customer assets in offline cold storage and meet stricter capital and insurance tests.
The regulator published a proposed framework on August 20 that would force digital asset exchanges and custodians to segregate client holdings from company funds, tighten custody practices, and report major losses and cyber incidents quickly. Firms would have to notify the SEC of specified incidents within 24 hours and deliver a detailed incident report within 48 hours, a disclosure cadence the regulator likens to rules already applied across the banking sector.
The proposal raises the financial bar for operators. Digital Asset Exchanges and Digital Asset Custodians would each need minimum paid-up capital of ₦2 billion ($1.5 million). Digital Asset Platform Operators, Digital Asset Offering Platforms, and Real-World Asset Tokenisation Platforms would require ₦500 million ($371,600). Virtual Asset Service Providers face a ₦200 million ($149,000) minimum. On top of those baselines, firms must hold a current fidelity insurance bond equal to at least 25% of the applicable paid-up capital.
The rules also build consumer protections into product flows. Certain digital asset offerings would carry a five-business-day cooling-off window, during which investors may withdraw their subscription and receive a full refund subject to the conditions in the draft. The fidelity cover is designed to respond to losses from operational failures, technology breakdowns, cybersecurity breaches, custody lapses, fraud, negligence, misconduct, misappropriation, or unauthorised transactions. It would not cover losses from market price movements or poor investment returns.
The reforms respond to clear market failures. When platforms fail or are hacked, customers can be locked out of their funds for long stretches. The draft cites earlier incidents in the market, including a January 2022 breach at a local startup that reportedly cost about $2 million and led the company to freeze withdrawals.
The framework is open for public comment. If adopted, exchanges, custodians, and other licensed operators will need to rework custody arrangements, build insurance and capital buffers, and uprate incident response and disclosure capabilities. That will raise costs for smaller providers while giving consumers clearer recovery pathways when disruption occurs.
