How to Register and Obtain License as a Virtual Assets Service Provider (VASP) in Nigeria

Introduction

The enactment of the Investment and Securities Act, 2025 ushered in a new regime for the formal recognition and acceptance of cryptocurrencies in Nigeria with the implication that cryptocurrencies and other forms of virtual assets can now be legally traded in Nigeria.

Although there have been rules issued by the Securities and Exchange Commission (SEC) in 2022 to regulate the licensing and operations of virtual/digital assets in Nigeria, there were regulatory challenges which prevented trading or transacting in virtual assets thereby creating regulatory uncertainties. One of such regulatory challenges arose as a result of the Central Bank of Nigeria (CBN) circular in 2021 which mandated all financial institutions to identify and close the bank accounts of persons and entities trading or operating cryptocurrency exchanges in Nigeria.

With the enactment of the ISA 2025, the regulatory uncertainties that surrounded virtual/digital assets in Nigeria are now a thing of the past as cryptocurrencies and other forms of virtual/digital assets are now recognized and can be legally traded or transacted in Nigeria.

Regulatory Frameworks for Virtual Assets in Nigeria

The main regulatory frameworks for the registration, operation and regulation of virtual/digital assets in Nigeria are the ISA 2025 and the New Rules on Issuance, Offering Platforms and Custody of Digital Assets (“Digital Asset Rules), 2022 issued by the Nigerian Securities and Exchange Commission.

Read our previous article on Registrations and Licensing with the Nigerian Securities and Exchange Commission (SEC)

The Digital Asset Rules provide the regulatory requirements for licensing, operating and regulating various trading activities in relation to virtual assets. The activities that are regulated by the rules are Virtual Assets Service Provider (VASP), Digital Assets Offering Platform (DAOP), Digital Assets Exchange (DAX) and Digital Assets Custodian (DAC).

Who are Virtual Assets Service Providers?

Virtual Assets Service Providers are entities that facilitate the exchange between virtual assets for fiat currency or other virtual assets, transferring virtual assets, and providing safekeeping or administration for virtual assets.

The Digital Asset Rules defined a VASP as an entity that conducts one or more of the following activities or operations for or on behalf of another person:

1. exchange between virtual assets and fiat currencies;
2. exchange between one or more forms of virtual assets
3. transfer of virtual assets;
4. safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
5. participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Initial Assessment Filing

All promoters, entities or businesses proposing to conduct initial digital asset offerings (including VASPs) within Nigeria or targeting Nigerians are required to complete and submit and initial assessment form and a draft white paper. The details of the digital assets offering, the distributed technology ledger, information about the issuer, a legal opinion providing the justifications for classifying the tokens to be sold through the digital asset offering as securities or otherwise are part of the information and documents to be provided for the initial assessment filing to SEC.

Accelerated Regulatory Incubation Program

The outcome of the initial assessment filing would determine whether a VASP promoter, entity or business can apply to SEC for participation in the Accelerated Regulatory Incubation Program (ARIP). Provided an applicant is successful in the initial assessment filing, SEC would notify it of its eligibility to submit an application for ARIP. Participation in ARIP provides an applicant with an Approval-in-Principle (AIP) to operate and provide its virtual/digital assets services in a regulated environment supervised by SEC. Where an applicant is successful in ARIP, it would be entitled to apply for full registration with SEC to provide its services to the general public.

Requirements for Registering Virtual Assets Service Providers

VASP license applicants are legally required to be local companies incorporated with the Corporate Affairs Commission (CAC) in Nigeria.

Read our previous article on How to Register a Company with Foreign Participation in Nigeria

The applicants must also meet all the requirements applicable to VASP license as stipulated by SEC. Some of the requirements which VASP applicants must satisfy include the following:

1. Incorporation documents of the applicant issued by CAC including certificate of incorporation, memorandum and articles of association (MemArt) and status report of the company.
2. Latest audited accounts or audited statement of affairs in the case of a newly incorporated company.
3. Business model with a clear or unique value proposition or will contribute to the development of the capital market
4. Copies of the rules for fair treatment of users, investors protection and management of conflict of interest, dispute resolution, etc.
5. Evidence of risk management capability.
6. Evidence of appropriate security arrangements pursuant to SEC Technology Risk Management Guidelines.
7. A sworn undertaking to operate and comply with its obligations under the Digital Assets Rules.
8. An office space in Nigeria managed by a director of the company.
9. A letter of no objection or approval letter from a relevant sectoral regulator where the applicant is regulated by another sectoral regulator.
10. Any additional requirements which SEC may require from the applicant.

Capital Requirements and Registration Fees

The minimum paid-up capital for obtaining a VASP registration is N500,000,000 (Five Hundred Million Naira) which could be bank balances, fixed assets or investments in quoted securities. There is also a requirement of a current fidelity bond covering at least 25% of the minimum paid up capital.

The registration fees for obtaining a VASP license from SEC is N30,000,000 (Thirty Million Naira). The applicant is also required to pay application fees, processing fees, and sponsored individual fees which is chargeable per sponsored individuals.

The application for a VASP license may be approved or denied by SEC. The application would be approved and the applicant granted a registration and listed in the list of SEC’s licensed capital market operators where the applicant satisfies all the registration requirements. The application may also be denied where the proposed activities of the applicant violate any laws, rules and regulations of SEC or it would be injurious to investors.

Conclusion

Virtual assets service providers (VASPs) and other players in the virtual/digital assets market can now be registered with the Nigerian SEC as the regulatory landscape relating to trading or transacting in cryptocurrency and other virtual assets has legally recognized virtual/digital assets with the enactment of the ISA 2025.

The first step in the registration process for a VASP applicant, is to submit an initial assessment filing with SEC further to which it may be approved by SEC to participate in ARIP and obtaining an Approval-in-Principle. A successful participation in ARIP would entitle the VASP applicant to apply to SEC for registration. The applicant would be issued with registration where it meets the registration requirements and pay the registration fees. The application for registration may be rejected where the applicant’s proposed activities are contrary to Nigerian laws, public policy or would be injurious to investors.