The Securities and Exchange Commission (SEC) has proposed new limits on how much individual investors can put into digital asset offerings in Nigeria as part of efforts to strengthen investor protection.
Under the proposed rules, a retail investor would not be allowed to invest more than N1 million in digital assets from a single issuer. The total amount a retail investor could put into digital asset offerings across different issuers would also be limited to N10 million within any 12-month period.
The proposal is contained in the SEC’s draft rules covering digital and virtual asset operations, custody and markets. The regulator said the framework is designed to provide stronger oversight as digital assets become increasingly popular among Nigerians.
The SEC also wants platforms offering digital assets to take additional precautions when an investor wants to exceed certain thresholds. Where an investor intends to put more than N1 million into an offering or more than five per cent of their net worth, whichever is higher, the platform would have to provide a clear risk warning and obtain the investor’s explicit approval.
The investor would also have to demonstrate an understanding of the investment and the risks involved.
Digital Asset Offering Platforms would be expected to assess whether an investment is suitable for a particular customer. This assessment would consider the investor’s knowledge, previous experience, financial position and ability to withstand potential losses.
Platforms would also have to introduce systems for monitoring investment limits and preventing investors from exceeding the permitted amounts.
The proposed framework includes measures such as investor categorisation, risk acknowledgements, net-worth declarations and systems for combining investments made through different offerings on a platform.
However, the proposed retail limits may not apply to institutional investors, qualified investors, high-net-worth individuals and other categories recognised by the SEC.
The latest proposal is part of a wider push by Nigerian authorities to bring the digital asset industry under tighter regulation. Earlier this year, the SEC increased the minimum capital requirement for digital asset exchanges from N500 million to N2 billion. Affected companies have until June 30, 2027, to meet the new requirement.
The government has also taken steps to improve coordination among agencies responsible for supervising virtual assets. The SEC said President Bola Tinubu signed a Virtual Assets Coordination Executive Order in July, providing for a Central Bank-led council involving agencies including the CBN, SEC and Nigeria Revenue Service.
Tax compliance is also becoming a bigger part of the digital asset market, with virtual asset participants expected to register, report relevant activities and meet tax obligations covering areas such as trading, staking, mining, decentralised finance rewards, airdrops and stablecoins.
Nigeria’s large cryptocurrency market is one reason regulators are increasing their focus on investor protection. The SEC cited industry data showing that the country recorded about $92.7 billion in on-chain crypto activity over a 12-month period, making Nigeria one of the largest crypto markets in Sub-Saharan Africa.
Retail investors accounted for about $57 billion of that activity, while an estimated 26.3 million Nigerians regularly hold or transact in digital assets.
With the proposed investment limits, the SEC is seeking to balance the growth of Nigeria’s digital asset industry with measures aimed at protecting individuals from excessive losses and poorly understood investments.
The proposal remains open for consideration as the commission continues to develop Nigeria’s regulatory framework for the rapidly expanding digital asset market.
