Nigeria Establishes Digital Asset Framework with AML Rules, Sandbox to Attract Investment

The Nigerian Securities and Exchange Commission (SEC) has established a comprehensive regulatory framework for digital assets under the 2025 Investments and Securities Act (ISA 2025), marking a pivotal shift in the country’s approach to cryptocurrency and stablecoins. The new law explicitly classifies virtual assets, cryptocurrencies, and tokens as securities, granting the SEC authority to oversee the sector and enforce compliance with anti-money laundering (AML) and know-your-customer (KYC) standards. This development, announced at the Nigeria Stablecoin Summit in July 2025, aims to balance innovation with financial stability while attracting global investment [1].

Under the framework, issuers of fiat-referenced stablecoins must maintain verifiable reserves, undergo regular audits, and disclose reserves to ensure transparency. The SEC also emphasizes interoperability between digital assets and traditional financial systems, particularly for payments and settlements. Director-General Emomotimi Agama highlighted that Nigeria is “open for stablecoin business, but on terms that protect our markets and empower Nigerians,” framing the policy as a strategic bid to position the country as Africa’s hub for digital currency innovation [2].

Foreign virtual asset service providers (VASPs) seeking access to Nigeria’s market must comply with reciprocal recognition agreements, including enforceable memoranda of understanding (MoUs) with their home country regulators. This requirement ensures regulatory equivalence and safeguards market integrity. Additionally, the SEC is drafting rules to regulate digital asset marketing, mandating promotional campaigns to secure prior approval to prevent misleading or high-risk messaging targeting retail investors [3].

The regulatory overhaul follows a 2024 lawsuit against Binance over alleged contributions to naira devaluation and unpaid taxes, which underscored the government’s intent to enforce compliance without stifling innovation. The SEC’s regulatory sandbox model, which tests compliance frameworks with conditional approvals for early participants like Busha Digital and Quidax Technologies, reflects a phased approach to integrating digital assets into the national financial ecosystem. Agama noted that Nigeria’s ambition extends to leveraging stablecoins for cross-border trade across Africa [4].

International attention has already been drawn to Nigeria’s evolving landscape. Blockchain.com, for instance, announced plans to open a physical office in Nigeria in May 2025, citing regulatory clarity as a key factor. The SEC’s strategy—combining strict compliance with incentives for innovation—positions the country to attract startups and investors seeking a structured environment in Africa. However, the success of this framework will depend on consistent enforcement and adaptability to technological shifts [5].

Nigeria’s approach diverges from outright bans or unregulated proliferation seen elsewhere, offering a nuanced model that could influence regional regulatory trends. By prioritizing reserve backing, AML/KYC adherence, and market integration, the SEC addresses financial instability risks while fostering innovation. The government’s emphasis on cross-border trade through stablecoins further aligns with broader economic goals, potentially boosting fintech-driven growth. This balanced strategy signals Nigeria’s intent to lead in regulated crypto infrastructure, a departure from earlier enforcement-heavy measures [6].

Sources:

[1] [title1] [https://www.ainvest.com/news/nigeria-establishes-stablecoin-regulatory-framework-aml-rules-sandbox-drive-innovation-market-trust-2507]

[2] [title2] [https://coincodecap.com/nigeria-welcomes-stablecoin-firms-as-sec-chief-hints-at-policy-shift]

[3] [title3] [https://www.cryptoninjas.net/news/nigeria-sends-strong-signal-to-crypto-were-open-for-stablecoin-business-on-our-terms]

[4] [title4] [https://cryptoslate.com/nigeria-sec-welcomes-stablecoin-innovation-while-ensuring-compliance]

[5] [title5] [https://www.bitcoininsider.org/article/280460/nigeria-sec-supports-stablecoin-growth-focus-regulation]

[6] [title6] [https://cryptodnes.bg/en/nigeria-signals-greenlight-for-stablecoin-innovation-under-new-regulatory-vision]