Africa Crypto News: Nigeria Wants 80% of Crypto Assets Offline

Nigeria is preparing one of Africa’s strictest crypto custody frameworks. In a draft published on August 20, the SEC requires digital asset custodians to hold at least 80% of their clients’ crypto-assets in cold storage. Major incidents must be reported within 24 hours, and large exchanges will need a minimum capital of 2 billion nairas.

Nigerian crypto is clearly entering a new phase: one where operating legally will become significantly more expensive.

Africa Crypto News: 80% of Assets Must Remain Offline

The principle is simple. A cold wallet remains disconnected from the internet, significantly reducing permanent exposure to remote attacks. The SEC wants Digital Asset Custodians to store at least 80% of their clients’ digital assets in them.

This new step follows the Central Bank of Nigeria’s recent opening of its sandbox to VASPs. Abuja is no longer just looking to bring crypto companies into an experimental framework. It is beginning to define precisely how they must secure user funds.

The remaining 20% can be used for withdrawals and transaction settlements via hot wallets. However, this must be managed with limits, access controls, enhanced monitoring, and risk mitigation mechanisms.

The official draft published by the Nigerian SEC also mandates the segregation of client assets and prohibits mixing them with the company’s own funds.

Exchanges Must Hold 2 Billion Nairas in Capital

Custody is only part of the tightening. A crypto exchange or custodian would need to have a minimum capital of 2 billion nairas. Platform operators, token offerings, and RWA tokenization platforms would be subject to a 500 million nairas requirement. For other VASPs, the threshold drops to 200 million.

A fidelity insurance policy covering at least 25% of the minimum capital is also required.

These amounts could significantly raise the barrier to entry for small local businesses. Nigeria had already begun transforming a market estimated at tens of billions of dollars into a much more formal industry, as explained in our analysis of crypto taxation and payments in Nigeria.

This move may boost confidence. However, it could also favor players who already have enough capital to absorb regulatory costs.

SEC Demands 24-Hour Incident Reporting

Whether a cyberattack, loss of client assets, data breach, or major failure: the initial notification to the SEC must occur within 24 hours. A detailed report is then expected within 48 hours.

The regulator also wants to be able to track reserves, wallets, and asset movements. Client funds must remain protected from creditors if a custodian becomes insolvent.

This tightening extends beyond Nigeria. Ghana has also recently strengthened its virtual asset supervision framework, while South Africa is working on cross-border crypto transfers.

The Africa crypto landscape is therefore changing rapidly. Just a few years ago, the debate was focused on banning or permitting cryptocurrencies. In Nigeria, the discussion has now shifted to capital, key custody, insurance, and regulatory reporting. It is far more serious—and far more costly.