VASP Licensing in Nigeria: Requirements and Process for Crypto Businesses

By Robert Stukes On 29 Dec, 2025 Comments (16)

What Is a VASP License in Nigeria?

A VASP (Virtual Asset Service Provider) license in Nigeria is the only legal way for crypto businesses to operate after the 2025 Investments and Securities Act. Before this, crypto companies worked in a gray zone-banks blocked them, customers used peer-to-peer apps, and regulators stayed silent. Now, the Securities and Exchange Commission (SEC) requires every crypto exchange, wallet provider, staking platform, or mining operation to get licensed. Without it, you’re breaking the law.

The license covers everything from buying and selling Bitcoin to running a crypto payment gateway or distributing tokens through airdrops. If your business touches virtual assets in Nigeria, you need this license. There’s no workaround. Even if you’re based overseas but serve Nigerian customers, you still have to apply.

Minimum Capital Requirement: N500 Million

The biggest hurdle for most startups is the N500 million (about $325,000 USD) paid-up capital requirement. This isn’t a suggestion-it’s a hard rule. You must show proof that this money is actually in your company’s bank account, not just promised. The SEC doesn’t accept loans or investor pledges as proof. You need audited financial statements showing the full amount as equity.

This requirement is among the highest in Africa. Compare it to Kenya or Ghana, where capital requirements are under $50,000. Nigeria’s goal is clear: keep out fly-by-night operators. Only companies with serious funding can survive the compliance load. Many small exchanges have already shut down because they couldn’t meet this threshold.

Corporate Registration and Local Presence

You can’t apply for a VASP license unless your company is legally registered with the Corporate Affairs Commission (CAC). That means you need a Certificate of Incorporation, Memorandum and Articles of Association (MEMART), and a current CAC status report. These aren’t paperwork formalities-they’re gatekeepers.

But here’s the catch: you must also have a physical office in Nigeria. Not a PO box. Not a co-working space. A real office with a sign, a receptionist, and a director who lives in Nigeria. The SEC wants someone on the ground who can be summoned for meetings or investigations. This kills remote-only models. International crypto firms either hire a local director or partner with a Nigerian entity.

Pixel art comparing a closed crypto startup to a thriving licensed VASP with compliance systems.

Operational Compliance: KYC, AML, and Record Keeping

Once you’re incorporated and funded, you need to prove you can run a secure, compliant business. The SEC demands full Know Your Customer (KYC) and Anti-Money Laundering (AML) systems. That means:

Verifying every user’s ID with government-issued documents
Collecting proof of address and source of funds
Blocking anonymous transactions
Monitoring for suspicious patterns (like rapid deposits followed by withdrawals)

You also need to keep all customer records for seven years-emails, transaction logs, ID scans, even chat logs with support teams. That’s longer than most banks. Failure to maintain these records can lead to license suspension or fines.

Your system must also be secure. The SEC’s Technology Risk Management guidelines require firewalls, encryption, two-factor authentication, and regular penetration testing. If you’ve ever been hacked, you won’t get approved.

The Two Paths: Standard License vs. ARIP

Nigeria offers two routes to get licensed:

Standard Application: Submit everything at once-capital proof, documents, policies, tech specs. The SEC takes 4-8 months to review. Most companies fail here because they miss one small detail.
Accelerated Regulatory Incubation Program (ARIP): This is for serious players who want to start fast. You apply with a basic business plan, proof of incorporation, and a Nigerian office. The SEC gives you preliminary approval in principle. You can begin operating under supervision while you finish the rest.

ARIP isn’t a shortcut-it’s a probation period. You must submit quarterly progress reports. At month 10, the SEC checks your progress. At month 12, you either get your full license or get told to shut down. Many startups use ARIP to test the market before spending millions on full compliance.

Documentation You Must Submit

Here’s the full checklist the SEC expects:

CAC Certificate and Status Report
Audited financial statements or statements of affairs
Business model document explaining your service, revenue model, and target users
Complete KYC and AML policy manuals
Risk management framework covering fraud, cyber threats, and operational failures
Investor protection rules and dispute resolution process
Staffing plan showing compliance officers, tech team, and customer support
Technical infrastructure specs (servers, data centers, backup systems)
Letters of no objection from CBN or other regulators (if applicable)
Sworn undertaking signed by director/company secretary

Missing one item? Your application gets returned. No second chances. The SEC doesn’t give feedback unless you ask-and even then, responses are slow.

Pixel art of a startup advancing through SEC's ARIP probation pathway with progress bars.

Why This Matters for the Nigerian Crypto Market

This isn’t just about regulation-it’s about survival. Before 2025, Nigeria had the highest crypto adoption in Africa. People used Bitcoin to send remittances, pay for goods, and protect savings from inflation. But banks refused to work with crypto firms. Now, licensed VASPs can open bank accounts. They can partner with fintechs. They can get insurance. They can grow.

But the cost is high. Compliance expenses for a medium-sized exchange now run over N20 million per year. That’s rent, salaries, audits, software, legal fees. Many small players can’t afford it. The market is consolidating. Only big firms with VC backing or foreign investment will survive.

The government’s goal? Tax revenue. Nigeria wants to pull crypto into the formal economy. Right now, less than 10% of GDP comes from taxes. They aim for 18% by 2027. Crypto transactions were invisible. Now, every trade is tracked. Every profit is taxable.

What Happens If You Don’t Apply?

If you’re operating without a license, you’re at risk. The SEC can:

Order banks to freeze your accounts
Block your website from Nigerian ISPs
Impose fines up to N100 million
Prosecute directors for operating an unlicensed financial business

Several unlicensed exchanges have already been shut down. Their owners received warning letters. Some were summoned for interviews. Others got their domains seized. There’s no grace period anymore.

Is This the Future for Africa?

Nigeria is leading the way. Ghana, Kenya, and South Africa are watching closely. If this system works-stable, secure, and tax-compliant-it could become the model for the whole region. But it’s not perfect. Critics say it favors big players and pushes innovation underground. Supporters say it brings legitimacy and protects users from scams.

The truth? It’s a trade-off. You trade freedom for safety. You trade speed for stability. And if you’re serious about building a crypto business in Nigeria, you have no choice but to play by these rules.