SEC proposes N1m limit per crypto issuer for retail investors

The Securities and Exchange Commission (SEC) has proposed limiting retail investors to N1 million per digital-asset issuer and N10 million across all digital-asset offerings within 12 months, as the regulator moves to strengthen investor protection in Nigeria’s rapidly expanding cryptocurrency market.

The proposed limits are contained in the SEC’s Proposed Rules on Digital and Virtual Asset Operations, Custody and Markets, which seek to establish a broader framework for digital-asset issuance, trading, custody and related activities.

Under the proposed rules, a retail investor would not be allowed to invest more than N1 million with a single issuer or more than N10 million in aggregate across digital-asset offerings within any 12 months.

Where an investor seeks to invest above N1 million or 5 per cent of their net worth, whichever is higher, the Digital Asset Offering Platform would be required to apply additional safeguards before accepting the transaction.

These would include a prominent risk warning, express consent from the investor, confirmation that the investor understands the nature and material risks of the investment, and an assessment of whether the investment is appropriate based on the investor’s knowledge, experience, financial position and ability to absorb losses.

Platforms would also be required to establish systems for monitoring and enforcing the investment limits.

The systems would cover investor categorisation, risk acknowledgement, net-worth declarations or assessments and the aggregation of investments made through their platforms.

The proposed limits would not necessarily apply to institutional investors, qualified investors, high-net-worth individuals and other investor categories recognised by the Commission, which may receive exemptions.

The proposal represents a shift in Nigeria’s digital-asset regulation from primarily supervising operators to placing specific restrictions and safeguards around retail participation.

Nigeria has expanded its cryptocurrency regulatory framework significantly in recent months as digital assets become more important to payments, investment and cross-border transactions.

In January, the SEC raised the minimum capital requirement for digital-asset exchanges from N500 million to N2 billion, with affected operators given until June 30, 2027 to comply.

In July, President Bola Ahmed Tinubu signed the Virtual Assets Coordination Executive Order, establishing a CBN-led Virtual Asset Council to coordinate oversight among the Central Bank of Nigeria, SEC, Nigeria Revenue Service and other government agencies.

The SEC also expanded its Accelerated Regulatory Incubation Programme in July by admitting seven additional digital-asset firms into its regulatory sandbox, following the approval-in-principle previously granted to Quidax and Busha.

The Nigeria Revenue Service has separately introduced tax guidelines covering virtual assets, including cryptocurrency trading, staking, mining, decentralised finance rewards, airdrops and stablecoins.

The latest SEC proposal comes as Nigeria’s cryptocurrency market remains one of the largest in Africa.

Data cited by Nairametrics put Nigeria’s on-chain crypto activity at $92.7 billion over12 monthsd, making it the largest crypto market in Sub-Saharan Africa.

Retail transactions accounted for about $57 billion, with a significant share linked to cross-border payments for goods and services.

About 26.3 million Nigerians, or nearly one-quarter of the adult population, were also estimated to regularly hold or transact in digital assets.

For the SEC, the proposed caps are intended to prevent retail investors from taking excessive exposure to an asset class known for high volatility and significant loss risks.

For the industry, the key question will be whether the limits improve consumer protection without unnecessarily restricting legitimate participation in a market increasingly used for payments, investment and financial inclusion.