Nigeria is moving to tighten the security requirements for cryptocurrency businesses, with the Securities and Exchange Commission (SEC) proposing that digital-asset custodians keep at least 80% of customers’ assets in cold storage. The proposal forms part of a broader overhaul of the country’s rules for digital and virtual asset operations, custody and markets.
Cold storage means keeping crypto assets offline rather than in internet-connected wallets. The approach is designed to reduce exposure to hacking, unauthorised access and other cyber threats. Under the proposed rules, assets held in hot or warm wallets would be limited to what firms reasonably need for withdrawals, settlements, transaction processing and other operational requirements.
The proposed 80% threshold is part of a wider effort by Nigerian regulators to strengthen investor protection as the country’s digital-asset market expands. The SEC’s draft rules cover exchanges, custodians, virtual asset service providers, tokenisation platforms and digital-asset offering platforms. They would also apply to businesses operating outside Nigeria if they provide services to Nigerian residents or target Nigerian investors.
For crypto companies, the requirement could significantly change how customer funds are managed. Platforms will need to maintain enough assets online to support normal transactions while ensuring the majority remains protected offline. This creates a balancing act between security and liquidity, particularly for exchanges handling large numbers of withdrawals and transfers each day.
The rules also place greater emphasis on how firms manage private cryptographic keys. Custodians would be expected to implement controls such as segregation of duties, restricted access, recovery arrangements and multi-party authorisation for significant transactions. These measures are intended to reduce the possibility that one employee, compromised account or security failure could expose large amounts of customer funds.
The cold-storage proposal comes alongside tougher financial requirements. The SEC has proposed a minimum capital requirement of ₦2 billion for digital-asset exchanges and custodians, while some other categories of virtual-asset businesses would face lower thresholds. The regulator also wants greater access to firms’ operational, financial, wallet, custody and settlement information.
For Nigerian crypto users, stronger custody requirements could improve confidence in regulated platforms. Crypto exchanges have historically faced criticism over security vulnerabilities, weak internal controls and the risks associated with keeping customer assets online. Moving most assets offline could reduce one important category of risk.
However, the proposed framework could also raise operating costs for smaller firms. Meeting capital requirements, implementing sophisticated custody systems and maintaining compliance teams may prove difficult for startups that are still building their customer base. It could potentially encourage consolidation within Nigeria’s digital-asset industry.
The SEC has presented the rules as part of its broader effort to develop a safer and more resilient digital-asset market. The proposals remain subject to the regulatory process, meaning the final requirements could change.
Still, the direction is clear: Nigeria wants crypto businesses to operate more like serious financial institutions, with stronger safeguards around customer assets. For the country’s growing crypto industry, the next phase may depend not only on innovation and adoption, but also on proving that customers’ digital wealth can be protected.
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