Key takeaways:
- Nigeria’s Securities and Exchange Commission has proposed new rules requiring foreign-issued stablecoins to obtain SEC recognition before being listed or traded on regulated Nigerian platforms
- The draft rules also set a minimum 120% Liquidity Coverage Ratio for stablecoin issuers and require quarterly stress tests
- SEC recognition would not extend to payments, remittances or banking activity, which remain under the Central Bank of Nigeria’s separate authority
Nigeria’s Securities and Exchange Commission (SEC) has proposed new rules that would require foreign-issued stablecoins to obtain regulatory recognition before they can be listed, traded, custodied or promoted on any regulated Nigerian digital asset platform.
The commission published the draft rules on August 20, opening a two-week public consultation period. The proposal covers a broad prudential framework for stablecoin issuers operating in Nigeria, but its recognition requirement for foreign tokens stands out as one of its more consequential provisions, since it would apply to major global stablecoins seeking exposure to Nigerian investors through licensed exchanges or platforms.
Under the draft, the SEC’s recognition review would examine an issuer’s home-country regulatory status, reserve quality and liquidity, custody and segregation arrangements, redemption rights, independent attestations, audited disclosures and market concentration.
The regulator could also require a foreign issuer to appoint a local representative or hold Nigeria-specific reserve, liquidity or redemption support, effectively creating a gate between a stablecoin being globally available and being permitted for use through a regulated Nigerian platform.
A narrower recognition than it might appear
The draft rules are explicit that SEC recognition would not amount to a broad Nigerian operating licence. Recognition would cover listing, trading, custody, settlement and other capital-market activity, but would not authorise payment-system operation, remittances, foreign-exchange dealing, banking, deposit-taking, electronic-money issuance or stored-value activity.
Where a proposed use falls under the Central Bank of Nigeria’s mandate, separate CBN approval would still be required before that activity could begin.
That division reflects the broader institutional architecture Nigeria has been building around digital assets in recent weeks. The stablecoin proposal follows an executive order President Bola Tinubu signed establishing a Virtual Asset Council to coordinate oversight among the CBN, the SEC, the Nigeria Revenue Service and other agencies, without creating a new regulator or transferring existing statutory powers between institutions.
Under that framework, registration responsibilities are meant to follow the nature of the activity and asset involved, with the SEC handling securities-like activities and the CBN overseeing payment, settlement and custody services tied to non-security virtual assets.
Liquidity and reserve requirements for issuers
Beyond the recognition gate, the draft rules would require stablecoin issuers to maintain a minimum 120% Liquidity Coverage Ratio, measuring high-quality liquid reserve assets against projected net redemption outflows over a 30-day period.
Naira-backed stablecoins would need at least 100% reserve backing, foreign-currency-backed stablecoins would need 120%, and crypto-backed stablecoins would face collateral requirements of 150% to 200% depending on the volatility and quality of the underlying assets.
Issuers would also be required to run quarterly stress tests modeling scenarios such as a 50% redemption of liabilities within 48 hours, a 30% decline in crypto markets within 24 hours, and the failure of a reserve-holding institution, alongside monthly reserve attestations and annual audited financial statements. The rules would additionally cap a single Nigerian bank’s exposure at 25% of an issuer’s reserves and a single foreign bank’s exposure at 20%, aiming to prevent concentration risk within reserve holdings.
The proposal remains a consultation draft, with comments due within two weeks of its August 20 publication. No date has been set for when, or in what form, the rules might be finalized.