Nigeria’s Securities and Exchange Commission has proposed raising the minimum paid-up capital for virtual asset service providers (VASPs) to ₦1 billion, two times the previous proposed requirement of ₦500 million. The paid-up capital requirement consists of bank balances, fixed assets or investments in quoted securities. Virtual asset service providers include cryptocurrency exchanges, peer-to-peer platforms and OTC desks.

One cryptocurrency exchange told TechCabal that operators received the draft proposal on Friday. The SEC first shared the draft on virtual asset providers in 2022 and, at the time, proposed N500 million in minimum paid-up capital.

“Our SEC has indirectly told the community that this game is for the big boys,” said Rume Ophi, a crypto expert. 

A crypto exchange operator who asked not to be named told TechCabal believes local operators should unanimously reject the proposal. 

“This proposal locks out a lot of local players. I suspect at the end of the day that the foreign-owned companies will dominate the crypto space in Nigeria,” said Tim Akimbo, a Bitcoin expert. 

Apart from the N1 billion minimum paid-up capital, virtual asset companies must also provide current Fidelity Bond covering at least 25% of the minimum paid-up capital.

A fidelity bond is a type of insurance that offers business protection against losses caused by employees who commit fraud, theft, and forgery. The rules also allow the SEC to, at any time, impose additional financial requirements on the digital asset operator commensurate with the nature, operations, and risks posed by the company. 

The commission also increased the number of additional documents required for registration. The new rules require “a sworn undertaking that the applicant will be able to operate an orderly, fair, and transparent market in relation to the securities including derivatives that are offered or traded, on or through its platform.” 

Frank Eleanya Senior Reporter, TechCabal

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