Nigeria’s parliament has sounded an urgent alarm over what MPs describe as a draconian new capital gate for crypto operators that risks pushing activity underground and denying a generation access to digital finance. At a technical session in the National Assembly Complex, the House Ad-Hoc Committee on the Economic, Regulatory, and Security Implications of Cryptocurrency Adoption urged the Securities and Exchange Commission to review a proposed minimum paid up capital requirement for Virtual Assets Service Providers (VASPs) that ranges from ₦500 million to ₦1 billion.
The committee, chaired by Olufemi Bamisile, made the case that while supervision is necessary, the scale of the capital threshold is prohibitive and will tilt the market towards incumbents and offshore platforms rather than nurture local startups and youth entrepreneurs. Lawmakers warned that an insistence on a ₦1bn floor for exchanges and custodians will deter early stage investment and concentrate control of the market in a handful of well capitalised players.
This push to revisit capital rules follows regulatory moves by the SEC in 2024 to bring digital assets formally within the capital markets framework. The SEC’s March 2024 amendments and related exposure documents set out detailed registration and governance requirements for exchanges, custodians and other intermediaries, and proposed higher minimum paid up capital for certain licence classes. Stakeholders have been given windows for comment and the SEC has framed the changes as necessary to protect investors and the integrity of the financial system.
Critics point to an awkward policy juxtaposition. Nigeria’s earlier rules required a lower threshold for some digital asset platforms; the abrupt elevation to a billion naira for DAXs and DACs is likely to reshape market structure overnight. Legal analysts and industry insiders argue that an incremental or tiered approach, combined with supervised incubator regimes, would keep barriers lower while giving regulators the oversight they say they want. The SEC’s own ARIP incubator framework was intended as a stepping stone to registration, but uncertainty around capital levels undermines that path.
Security agencies are watching closely. The Economic and Financial Crimes Commission told the committee that confiscated virtual and digital assets linked to criminal activity are already in its custody, and that the agency maintains dedicated digital wallets across its zonal offices for safekeeping of seized assets. The committee has directed the EFCC to provide full records of digital asset confiscations to help shape the legislative review. Recent court forfeiture orders of digital wallet funds underscore why lawmakers say oversight and transparency must be part of any regulatory architecture.
There is a stark policy dilemma at the heart of the debate. On one side stands investor protection, AML/CFT concerns and national security. On the other stands financial inclusion, innovation and the livelihoods of tech startups and youth who have adopted crypto for remittances, savings and commerce. Lawmakers insist a balance can be struck. Bamisile told stakeholders the committee is ready to build a framework that balances innovation with oversight and that safeguards the financial system while promoting youth inclusion.
The tone of the session was sharp. The committee expressed clear dismay that several statutory and regulatory bodies failed to attend the technical session despite invitations. The Office of the National Security Adviser, the Central Bank of Nigeria, the Nigerian Communications Commission, the Federal Inland Revenue Service, the Ministry of Finance and the Ministry of Communications, Innovation and Digital Economy were singled out for their absence. Lawmakers said the omission hampered efforts to design joined-up policy and suggested a worrying lack of co-ordination on a subject that spans taxation, telecommunications, national security and the payments system.
What happens next matters. If the SEC holds to a strict ₦1bn minimum without a clear transitional or tiered mechanism, expect consolidation, a greater role for foreign platforms that can satisfy capital tests, and a scramble among local players either to merge or to operate beyond the formal regulatory perimeter. If the SEC responds to the committee and adopts a proportional approach, Nigeria could preserve the twin aims of protecting consumers and seeding a domestic crypto ecosystem that creates jobs and drives innovation.
For regulators, the choice is between a strict gate that buys short-term supervisory simplicity and a calibrated ladder that fosters a domestic market while addressing AML and consumer risk. For lawmakers and the public, the worry is that an overbearing capital requirement will simply export Nigeria’s crypto activity to less regulated venues, where transparency and tax collection will be harder to enforce.
This committee’s review marks a pivotal moment. It will determine whether Nigeria’s regulatory path chokes a growing sector or channels it into a transparent, domestically anchored market that supports startups and protects citizens. The coming weeks should reveal whether the SEC listens to the chorus demanding a rethink or presses ahead with a policy that many fear is one size too large.
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