Introduction
The regulatory landscape for digital and virtual assets in Nigeria has taken a significant leap forward with the enactment of the Investments and Securities Act (ISA) 2025. This legislation officially brings crypto assets under the definition of securities, giving the Securities and Exchange Commission (SEC) direct authority to regulate the issuance, trading, and custody of digital tokens. In practical terms, token issuers, exchanges, custodians, and other virtual-asset intermediaries now sit squarely inside the SEC Nigeria perimeter and must comply with offering, licensing, conduct, disclosure, and AML/CFT requirements.
The new changes on virtual assets under ISA 2025
Under ISA 2025, the term securities has been broadened to include virtual/digital assets and investment contracts. Prior to ISA 2025, the regulation of digital assets in Nigeria relied largely on SEC Rules on Issuance, Offering Platforms and Custody of Digital Assets, and policy statements. With ISA 2025, this framework now has a statutory foundation, making compliance mandatory and enforceable.
Some key developments include:
a) Virtual and digital assets are now classified as securities under the Act: Section 357 of ISA defines Securities to include virtual and digital assets.
b) SEC has explicit authority over token offerings, exchanges, and custodians.
c) The Act reinforces investor protection measures and sets penalties for market abuse.
d) Coordination with CBN Guidelines (2024) allows banks to provide services to Virtual Asset Service Providers (VASPs) under strict conditions.
When a Crypto Asset Become a Security
Under ISA 2025, the test is substance over form. A digital token will likely be treated as a security if:
a) It represents an investment contract where investors expect profits from the efforts of others.
b) It mirrors equity, debt, or fund interests (security tokens).
c) It offers governance, dividend-like rights, or participation in a common enterprise.
d) Even tokens marketed as “utility” tokens may fall under securities regulation if they have profit or investment characteristics.
Compliance Obligations for Issuers and Intermediaries
- Token Issuers
Issuers conducting Initial Coin Offerings (ICOs), Security Token Offerings (STOs), or similar fundraising activities targeting Nigerians must:
a) Register with SEC or obtain a no-objection approval.
b) Submit a detailed whitepaper covering project details, tokenomics, risks, and governance.
c) Comply with disclosure and periodic reporting obligations.
- Digital Asset Service Providers
Platforms providing issuance, trading, or custody services must register as:
a) Digital Asset Offering Platforms (DAOPs)
b) Digital Asset Exchanges
c) Digital Asset Custodians
These entities must implement market surveillance, anti-money laundering controls, and investor protection measures similar to those in the traditional capital market.
- Banks and Payment Providers
Under the CBN Guidelines (2024), banks may now open accounts for Virtual Assets Service Providers (VASPs). However, they must adopt enhanced Know Your Customers (KYC), transaction monitoring, and Anti-Money Laundering/Countering the Financing of Terrorism compliance to mitigate financial crime risks.
Key Regulatory Risks and Penalties
Non-compliance may result in:
a) Monetary fines and sanctions by SEC.
b) Criminal liability for fraudulent token schemes or unregistered offerings.
c) Asset freezes or shutdown of operations for unlicensed exchanges and custodians.
Best Practices for Crypto Projects under ISA 2025
a) Perform a securities analysis before launching any token.
b) Register with SEC and adhere to licensing requirements.
c) Maintain strong AML/CFT frameworks and leverage blockchain analytics.
d) Ensure secure custody solutions and cyber risk controls.
e) Stay updated on tax obligations and structure transactions accordingly.
Conclusion
ISA 2025 provides much-needed legal clarity for Nigeria’s digital asset market by recognizing crypto as securities and establishing a clear compliance framework. While this brings opportunities for innovation and investor confidence, it also imposes strict obligations on issuers, exchanges, and custodians. Market participants should proactively adopt robust compliance strategies to navigate this evolving regulatory environment.