The Securities and Exchange Commission (SEC) has proposed a N30 million registration fee for digital asset operators seeking to operate in Nigeria.
The proposed fee is contained in the commission’s draft rules on “Digital and Virtual Asset Operations, Custody and Markets”, released on 20 August.
Under the proposed framework, digital asset exchanges (DAXs), digital asset custododians (DACs), digital asset platform operators (DAPOs), digital asset offering platforms (DAOPs) and real-world asset tokenisation platforms (RATOPs) would each be required to pay a N30 million registration fee.
The SEC also proposed new minimum capital requirements for operators.
DAXs and DACs would each require minimum paid-up capital of N2 billion, while DAPOs, DAOPs and RATOPs would require N500 million each.
Virtual asset service providers (VASPs), meanwhile, would be subject to a minimum capital requirement of N200 million. Applicants would also pay a N100,000 processing fee and a N300,000 application fee.
The commission proposed that regulated entities maintain a fidelity insurance bond covering at least 25 per cent of their minimum paid-up capital.
Fees under regulatory incubation programme
The proposed framework also sets out fees for entities seeking to operate under the Accelerated Regulatory Incubation Programme (ARIP).
Applicants would be required to pay an initial assessment fee of N200,000 and an ARIP application fee of N2 million.
The SEC further proposed ongoing supervisory charges based on the turnover of regulated entities.
A digital asset exchange operating under ARIP would pay a supervisory fee of 0.015 per cent of adjusted turnover, while other entities under the programme would pay 0.0075 per cent.
Following full registration, the proposed supervisory fee would increase to 0.025 per cent of adjusted turnover for DAXs and 0.015 per cent for other regulated entities.
The SEC said the fee for a fully registered digital asset exchange would be payable quarterly, or at another frequency prescribed by the commission.
SEC proposes limits on retail investments
The proposed rules also seek to introduce limits on retail investors’ participation in digital asset offerings.
Under the framework, a retail investor would not be allowed to invest more than N1 million in a single issuer or more than N10 million across digital asset offerings within any 12-month period, unless the SEC prescribes otherwise.
The commission also proposed additional safeguards where a retail investor seeks to invest more than N1 million or five per cent of their net worth, whichever is higher, in a digital asset offering.
In such cases, the digital asset offering platform would be required to issue a prominent risk warning, obtain the investor’s express consent and confirm that the investor understands the nature of the investment and the associated material risks.
The platform would also have to assess whether the investment was appropriate for the investor, taking into account their knowledge, experience, financial circumstances and ability to absorb potential losses.
Platforms would be required to maintain records of the risk warning, consent, confirmation and suitability assessment.
The proposed rules would also require digital asset offering platforms to establish systems for assessing, monitoring and enforcing applicable investment limits, including investor categorisation, risk acknowledgement, net worth declarations or assessments, and the aggregation of investments made through their platforms.
Institutional investors, qualified investors, high-net-worth investors and other categories recognised by the SEC may be exempted from the prescribed limits.
The commission also reserved the right to set different investment limits, risk-warning thresholds, investor categories and suitability or aggregation requirements for different types of offerings, investors or platforms.
SEC proposes wider regulatory requirements
The SEC said no person would be permitted to conduct a digital or virtual asset business, service, function or activity in Nigeria, or target people resident in the country, without being registered, approved or otherwise authorised by the commission under the proposed rules.
Regulated entities would also be required to comply with the Nigerian Code of Corporate Governance, the SEC’s corporate governance requirements and other applicable governance standards.
Under the proposed framework, a foreign stablecoin issuer seeking recognition to operate in Nigeria would have to appoint or maintain a local representative and demonstrate that it is authorised in an acceptable foreign jurisdiction.
It would also be subject to Nigeria-specific reserve, liquidity and redemption-support requirements that may be prescribed by the SEC.
The proposed framework further provides for mandatory registration under ARIP for companies seeking to operate in Nigeria’s crypto and digital asset market.
