Reps panel cautions SEC on review of capital benchmark for crypto operators

The House of Representatives Ad-Hoc Committee investigating the economic, regulatory, and security implications of cryptocurrency adoption and Point-of-Sale (POS) operations in Nigeria has raised concerns over the N500 million to N1 billion capital requirement for Virtual Assets Service Providers (VASPs) by the Securities and Exchange Commission (SEC).

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The committee, chaired by Olufemi Bamisile, raised the concerns during its technical session with relevant regulatory and security agencies held on Monday at the National Assembly.

It described the move as high and prohibitive, cautioning that while regulation is necessary to ensure transparency and consumer protection in the crypto space, the high entry threshold could discourage genuine investors, stifle innovation, and exclude young entrepreneurs who have shown growing interest in digital finance.

It, therefore, urged the SEC to review the capital requirement to create a more inclusive and innovation-friendly environment.

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The controversial policy

The SEC had earlier pegged the capital base for crypto operators at N500 million but later proposed an increase to N1 billion.

The commission said the move was to ensure only credible and financially stable operators are allowed to participate and to protect users’ funds. It also requires companies to take insurance coverage known as a fidelity bond to guard against internal fraud or losses.

However, many industry experts and stakeholders have argued that the new rule would favour only big firms and foreign investors while shutting out smaller Nigerian startups. They warned that such a policy could push local crypto businesses underground or force them to operate informally.

Currently, the N500 million benchmark remains in force while consultations on the proposed N1 billion threshold continue. The SEC has also issued provisional licences to a few local exchanges under its pilot regulatory programme.

EFCC speaks on confiscated digital assets

During the session, the Economic and Financial Crimes Commission (EFCC) informed the committee that it currently holds all virtual and digital assets confiscated from criminal activities in its custody.

The anti-graft agency explained that it operates designated digital wallets across its zonal offices for secure management of such assets.

In response, the committee directed the EFCC to submit detailed records of all confiscated digital assets to aid its ongoing legislative assessment and policy formulation.

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Mr Bamisile reaffirmed the committee’s commitment to developing a balanced regulatory framework that encourages innovation while safeguarding the financial system, ensuring transparency, enhancing youth participation, and protecting national security within Nigeria’s digital economy.

However, the committee expressed concern over the absence of several key agencies and institutions at the session.

They include the Office of the National Security Adviser (ONSA), Central Bank of Nigeria (CBN), Nigerian Communications Commission (NCC), Federal Inland Revenue Service (FIRS), Ministry of Finance, and the Ministry of Communications, Innovation and Digital Economy.

Mr Bamisile urged the agencies and ministries to accord due priority to the committee’s engagement, noting that their participation is crucial to addressing the economic and security risks associated with the fast-evolving digital financial landscape.