The Securities and Exchange Commission (SEC) Nigeria has proposed a N30 million registration fee for digital asset providers operating in the country in furtherance of its sustained regulatory drive to enhance the operational efficiency of the nation’s digital payment system.
The fee is contained in SEC’s proposed rules on “Digital and virtual asset operations, custody and markets” published last Thursday.
Under the framework, 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 N30 million registration fee.
Similarly, in the proposed rules, the commission also proposed the jacking up of capital requirements for operators.
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Fo instance, under the proposed framework while DAXs and DACs would each require minimum capital of N2 billion, while DAPOs, DAOPs and RATOPs would require N500 million each, virtual asset service providers (VASPs) would have a minimum capital requirement of N200 million and applicants would be required to pay a N100,000 processing fee and a N300,000 application fee.
The commission also proposed that regulated entities maintain a fidelity insurance bond covering at least 25 percent of their minimum paid-up capital, and recommended that entities seeking to operate under the accelerated regulatory incubation programme (ARIP) pay a N200,000 initial assessment fee and a N2 million ARIP application fee.
The draft rules also introduced ongoing supervisory charges linked to the turnover of regulated entities.
According to the commission, a DAX operating under ARIP will be required to pay a supervisory fee of 0.015 percent of adjusted turnover, while other entities under ARIP would pay 0.0075 percent.
The SEC also proposed that following full registration, an ARIP’s supervisory fee would rise to 0.025 percent of adjusted turnover for DAXs and 0.015 percent for other regulated entities while a digital asset exchange under full registration shall pay a supervisory fee of 0.025% of adjusted turnover, payable quarterly or at such frequency as may be prescribed by the commission.
In addition, the SEC proposed that any other regulated entity under full registration would pay a supervisory fee of 0.015 percent of adjusted turnover, payable quarterly or at such frequency as it prescribes.
It also proposed limits on retail investors’ participation in digital asset offerings, including a N1 million investment cap per issuer and an aggregate limit of N10 million within a 12-month period.
The rules further stipulated that a retail investor shall not invest more than N1,000,000 per issuer and N10,000,000 in aggregate across digital asset offerings within any twelve-month period, or such other amount as the Commission may prescribe from time to time.
The capital market regulatory commission further proposed that where a retail investor seeks to invest more than N1 million or five percent of the investor’s net worth — whichever is higher — in a digital asset offering, the digital asset offering platform must meet certain requirements before accepting the investment.
It stated the platform must provide the investor with a prominent risk warning, obtain the investor’s express consent to proceed with the investment, and confirm that the investor understands the nature of the investment and the material risks involved.
While recommending that the platform must also assess whether the investment is appropriate for the investor, taking into account the investor’s knowledge, experience, financial circumstances and ability to bear loss, the commission stated that the platform would be required to keep records of the warning, consent, confirmation, and assessment.
The draft framework also requires digital asset offering platforms to establish systems and controls for assessing, monitoring, and enforcing applicable investment limits.
The commission stated: “A Digital Asset Offering Platform shall establish systems and controls to assess, monitor and enforce applicable investment limits, including investor categorisation, risk acknowledgement, net worth declaration or assessment, and aggregation of investments made through its platform.”
The proposed rules stipulated that institutional investors, qualified investors, high net worth investors or other categories recognised by the commission, may be exempted from the prescribed limits.
The commission further stated it may also prescribe different investment limits, risk-warning thresholds, investor categories, suitability requirements or aggregation requirements for different classes of digital asset offerings, investors or platforms, adding that no person shall conduct any digital or virtual asset business, service, function or activity in Nigeria, or target persons resident in Nigeria, unless registered, approved or authorised by it in accordance with the proposed rules.
This is even as it proposed that such an entity must comply with the Nigerian code of corporate governance, the commission’s corporate governance requirements, and any other applicable governance standard.
The SEC further proposed that a foreign stablecoin issuer seeking recognition to operate in Nigeria must appoint or maintain a local representative, demonstrate authorisation in an acceptable foreign jurisdiction, and submit to Nigeria-specific reserve, liquidity and redemption-support conditions the commission may prescribe.
The draft rules also proposed mandatory registration under the ARIP for all companies seeking to operate in the country’s crypto market.
