Grace Ashiru
The Nigeria Securities and Exchange Commission has put forward a proposal to increase the minimum paid-up capital for virtual asset service providers (VASPs) to ₦1 billion, which is double the previously proposed requirement of ₦500 million. The paid-up capital requirement encompasses bank balances, fixed assets, or investments in quoted securities. VASPs include cryptocurrency exchanges, peer-to-peer platforms, and OTC desks.
One cryptocurrency exchange informed TechCabal that operators were in receipt of the draft proposal on Friday. The SEC initially circulated the draft on virtual asset providers in 2022, suggesting a minimum paid-up capital of N500 million at the time.
Rume Ophi, a crypto expert, stated that the SEC’s actions suggest that this game is intended for experienced players.
A cryptocurrency exchange operator, who preferred to remain anonymous, shared with TechCabal that local operators should collectively oppose the proposal.
“This proposal appears to exclude many local players. I anticipate that, ultimately, foreign-owned companies will come to dominate the cryptocurrency space in Nigeria,” explained Tim Akimbo, a knowledgeable expert in Bitcoin.
In addition to the N1 billion minimum paid-up capital requirement, virtual asset companies must also furnish a current Fidelity Bond that covers at least 25% of the minimum paid-up capital.
A fidelity bond is a form of insurance that provides businesses with protection from financial losses resulting from employee fraud, theft, and forgery. Moreover, the regulations empower the SEC to enforce extra financial obligations on digital asset operators as necessary, based on the company’s characteristics, activities, and associated risks.
The commission has expanded the list of supplementary documents necessary for registration. The updated regulations mandate a “sworn commitment from the applicant to uphold an organized, equitable, and transparent market for securities and derivatives offered or traded on their platform.”
