Nigeria’s ₦2 billion capital requirement puts crypto exchanges at a crossroads
Nigeria's ₦2 billion capital requirement for crypto exchanges is meant to create a stronger crypto ecosystem, but it may end making foreign players stronger and local players weaker.
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Nigeria’s Securities and Exchange Commission (SEC) has raised the bar for crypto exchanges operating in the country by introducing a minimum capital requirement of ₦2 billion for Digital Asset Exchanges and custodians.<br />
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This is part of the Commission’s revised minimum capital requirement for regulated capital market entities.<br />
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The SEC has steadily tightened its grip on the crypto sector over time. It has rolled out licensing frameworks for virtual asset service providers (VASPs), formally classified certain crypto assets as securities, and licensed two crypto exchanges.<br />
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By forcing exchanges to maintain a sizeable financial buffer, the SEC is reducing the risk of platform failures, protecting users’ funds, and creating a more credible environment for institutional participation.<br />
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However, for an industry where many players are still relatively young and where a significant portion of crypto activity happens outside traditional/local exchanges, the policy raises difficult questions.<br />
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Will smaller local exchanges be able to survive the cost of compliance? Does a flat ₦2 billion threshold reflect the realities of Nigeria’s crypto market, or does it risk concentrating the industry in the hands of a few big players? And what does this mean for innovation in a country that has consistently ranked among the world’s most active crypto markets?<br />
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To answer these questions, this article examines how industry players and experts view the SEC’s new minimum capital requirement and what they believe it means for the crypto exchanges in Nigeria.<br />
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Good intent, poor execution<br />
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From a regulatory standpoint, the SEC’s decision to impose a ₦2 billion minimum capital requirement is not entirely out of place. According to Ayotunde Alabi, CEO of Luno Nigeria, the policy is “directionally defensible” when viewed through the lens of market integrity.<br />
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By forcing exchanges to hold more capital, the regulator reduces the risk of thinly capitalised operators collapsing under stress, p...
