Nigeria’s crypto startups say SEC’s ₦2bn capital rule is a “disproportionate burden”

Nigerian crypto startup operators have said the increased minimum capital requirements, introduced by the Securities and Exchange Commission (SEC) on January 16, will place a “disproportionate burden” on early-stage startups.

In a position paper submitted to the SEC, the Stakeholders in Blockchain Association of Nigeria (SiBAN), an advocacy group comprising startups such as Dantown, Roqqu, and Breet, asked the SEC to review and refine the hiked capital thresholds for virtual asset companies.

The increased capital requirements require Digital Asset Exchanges (DAXs) and Digital Asset Custodians to maintain a minimum of ₦2 billion ($1.4 million) in their operating coffers, up from ₦500 million ($351,000). Other categories of digital asset operators were also assigned higher thresholds under the revised framework.

“While we recognise the policy’s intent to strengthen market integrity, investor protection, and systemic resilience, we respectfully submit that the current framework requires refinement to balance regulatory rigour with innovation sustainability,” the group said in the paper signed by its president, Barr. Mela Claude Ake.

SiBAN said that while the SEC’s tougher capital rules are intended to strengthen oversight and protect investors, the blanket ₦2 billion ($1.4 million) threshold risks squeezing out early-stage blockchain startups that lack deep funding but pose far lower systemic risk for larger, well-funded companies. This could narrow Nigeria’s virtual assets market to only a few players who can afford the cost of operating well-oiled, compliant businesses.

At the centre of its proposal is an alternative capital threshold system. The association recommends a tiered model with three levels: an “Innovation Track” requiring between ₦50 million ($37,300) and ₦200 million ($149,200) for startups and pilot-stage platforms; a “Growth Track” of ₦200 million–₦500 million ($149,200–$351,000) for expanding operators; and an “Institutional Track” of ₦500 million ($351,000) and above for established platforms subject to full regulatory supervision.

The group says this structure would align capital obligations more closely with operational scale and risk exposure.

SiBAN is also requesting an extended implementation timeline through 2028, proposing 12 months for tiered classification and transition planning, followed by an additional 18 months for capital formation and structural compliance. Under the current framework, affected entities are required to meet revised capital thresholds by June 30, 2027.

It also proposed the creation of a Digital Asset Regulatory Working Group, a monitoring, review, and consultation body, comprising SEC officials, SiBAN representatives, independent subject matter experts, and other regulators, such as the Central Bank of Nigeria (CBN) and the National Information Technology Development Agency (NITDA). The aim would be to “ensure continuous feedback loops, rapid problem-solving, and adaptive policy refinement” as the market evolves.

The paper also outlines alternative compliance pathways for smaller innovators and startups that may not immediately meet standalone capital requirements.

These include mergers and acquisitions (M&As) for smaller players to explore and meet the capital requirements; accelerator and incubator partnerships that allow startups to operate under the regulatory cover of licenced firms; white-label arrangements that let technology providers offer backend services without holding customer funds; and venture studio models that centralise compliance and governance standards across multiple startups.

SiBAN maintains that higher capital requirements could strengthen governance and encourage integration with traditional finance through venture capital engagement and strategic partnerships. However, it warns that without structural refinements, the thresholds may favour well-capitalised incumbents and foreign exchanges over domestic startups.

The SEC director general, Dr Emomotimi Agama, told CNBC’s Closing Bell in a January 16 interview that it raised capital requirements to strengthen resilience and ensure firms operating in the capital market and Nigeria’s newly legalised digital asset sector have adequate financial buffers to protect investors.

The regulator now faces the task of balancing that objective with concerns from industry participants about market entry barriers in a sector that remains in active development.