Nigeria’s Securities and Exchange Commission (SEC) is proposing tougher cryptocurrency requirements for companies operating in the country’s digital asset industry, including a ₦30 million registration fee and minimum capital requirements of up to ₦2 billion.

The proposed rules are part of the SEC’s broader effort to bring crypto exchanges, custodians, virtual asset platforms and other digital asset businesses under a clearer regulatory framework. As Nigeria’s digital asset market develops, the question is not only whether the rules add oversight, but whether they set a threshold that smaller firms can realistically meet.

While stronger oversight could help protect investors and reduce risks in the industry, the cost of complying with the proposed rules could create another problem: making the regulated crypto market accessible mainly to companies with significant financial backing.

For a Nigerian startup trying to build a crypto product, the question is not only whether it can meet the rules. It is whether it can afford to enter the market at all.

Under the proposed Rules on Digital and Virtual Asset Operations, Custody and Markets, several categories of digital asset businesses, including Digital Asset Exchanges (DAXs), Digital Asset Custodians (DACs), Digital Asset Platform Operators (DAPOs), Digital Asset Offering Platforms (DAOPs) and Real World Asset Tokenisation Platforms (RATOPs), would each pay a ₦30 million registration fee.

That is only the registration fee.

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Applicants would also be required to pay a ₦100,000 processing fee and a ₦300,000 application fee. Companies entering through the SEC’s Accelerated Regulatory Incubation Programme would face an additional ₦200,000 initial assessment fee and a ₦2 million ARIP application fee.

More significantly, companies would need to meet minimum capital requirements depending on the type of business they operate. Digital Asset Exchanges and Digital Asset Custodians would each require at least ₦2 billion, while DAPOs, DAOPs and RATOPs would require ₦500 million. Virtual Asset Service Providers would require ₦200 million.

For an established financial institution, those figures may be manageable. For a Nigerian startup still working to find product-market fit, raise funding and build a customer base, they could be prohibitive.

Strengthening the rules for Nigeria’s crypto industry matters for several reasons. Digital assets carry risks, and investors need protection from scams, poor management and companies that cannot safeguard customers’ money. Requiring firms to maintain sufficient funds and follow clear rules can make the market safer.

But regulation becomes problematic when the cost of entering the regulated market is so high that smaller legitimate businesses cannot participate.

A founder with a viable crypto product may have the technology, customers and expertise to build a useful business, but still be unable to raise hundreds of millions of naira, let alone ₦2 billion, before being allowed to operate at scale.

That creates a risk of concentrating the industry among a small number of well-funded companies.

Instead of bringing more businesses into the formal financial system, the rules could push some innovators in the opposite direction. Businesses that cannot afford the requirements may shut down, abandon their products, or continue operating outside the formal regulatory system.

That would undermine part of the purpose of regulation: bringing an emerging industry into a system where regulators can see, monitor and intervene when necessary.

One argument is that crypto companies should simply meet higher financial requirements because they handle customers’ money, similar to banks and other financial institutions.

But the comparison has limits.

Banks operate at a different scale, perform different functions and have established revenue models that can support extensive regulatory and capital requirements. A startup building a new crypto infrastructure product is not necessarily equivalent to a commercial bank taking deposits from millions of customers.

Applying difficult requirements across every part of the digital asset ecosystem could also discourage experimentation before companies have the chance to grow.

Even if smaller crypto businesses were to merge or pool resources to meet the standards, that would not necessarily solve the underlying problem. It could simply mean fewer independent companies, less competition and fewer opportunities for new founders.

The SEC’s proposed rules are not necessarily wrong because they demand more from crypto businesses. The key question is whether the requirements are proportionate to the risks and the size of the businesses being regulated.

A better framework could distinguish between a large exchange holding substantial customer assets and a smaller company providing a limited digital asset service. Capital requirements, fees and reporting obligations could then reflect the scale and risk of each business.

That would allow the SEC to maintain strong investor protection while giving smaller companies a realistic route to becoming fully regulated.

Nigeria is still developing its digital asset industry. The country has already introduced an executive framework for virtual assets, new tax rules and regulatory programmes for crypto companies. The SEC’s latest proposal could become another important step in bringing the sector into the formal economy.

But if compliance becomes too expensive, regulation could end up selecting the winners before the market has had the chance to do so.

The goal should not simply be to create a regulated crypto industry. It should be to create one that is safe for investors, accountable to regulators and accessible enough for Nigerian innovators to build in.

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