Introduction
The enactment of the Investment and Securities Act 2025 (ISA 2025) by President Bola Ahmed Tinubu marks a transformative moment for Nigeria’s capital markets. Repealing the long-standing ISA 2007, the new legislation introduces pivotal reforms that align the country’s regulatory environment with emerging digital realities. ISA 2025 modernizes the statutory framework to accommodate innovation in the financial sector, with particular emphasis on digital finance, financial inclusion, and global compliance.
This article outlines the major highlights of the new Act, especially as they affect Nigeria’s rapidly expanding FinTech ecosystem.
1. Expanding SEC’s Mandate to Embrace Financial Innovation
A cornerstone of ISA 2025 is the significant enhancement of the Securities and Exchange Commission’s (SEC) regulatory powers. The Act now grants the SEC comprehensive authority over Virtual Asset Service Providers (VASPs) and Digital Investment and Savings Platforms (DISPs)—bringing regulatory clarity to previously ambiguous areas of digital finance.
Prior to the enactment, operators such as Piggyvest, Cowrywise, Trove, and Bamboo functioned in regulatory grey zones. ISA 2025 now codifies these operations, empowering SEC to issue licenses, supervise conduct, and enforce compliance. This development not only strengthens consumer protection, but also gives legitimacy to tech-driven savings and investment platforms.
2. Legal Recognition of Digital Assets and VASPs.
In line with international best practices—including standards set by the Financial Action Task Force (FATF)—ISA 2025 explicitly classifies virtual assets as securities. Entities that exchange, store, or facilitate transactions involving digital assets must now register with the SEC.
This regulatory clarity resolves previous jurisdictional overlaps between the Central Bank of Nigeria (CBN) and the SEC. While the CBN retains authority over payment systems and monetary policy (such as eNaira or stablecoins), the SEC now oversees capital market functions involving blockchain-based tokens, tokenized securities, and crypto investment schemes.
3. Introduction of Digital Investment and Savings Platforms (DISPs)
Recognizing the growing role of mobile-based investing, ISA 2025 formally introduces Digital Investment and Savings Platforms (DISPs) as a regulated category. DISPs are platforms that facilitate access to fractional investments, curated portfolios, or savings plans using technology.
The Act mandates strict operational standards for DISPs, including:
- Investor suitability checks
- Disclosure obligations
- Custodial safeguards
- Anti-fraud protections
Startups like Risevest now have a defined compliance path, promoting investor confidence and strengthening institutional trust in app-based investment channels.
4. Classification of Securities Exchanges for Market Segmentation
ISA 2025 introduces new categories of securities exchanges under Section 273, distinguishing between:
- Composite Exchanges – for listing and trading all types of securities
- Non-composite Exchanges – for specialized markets (e.g., commodities, derivatives)
This segmentation promotes specialization and clearer oversight, encouraging innovation in niche investment markets such as commodities and digital asset trading.
5. Investor Protection Fund Extended to Digital Platforms
A major boost for investor confidence is the extension of the Investor Protection Fund (IPF) to cover clients of VASPs and DISPs. The SEC can now guarantee compensation for investors who suffer losses due to fraud or misconduct by licensed digital operators.
The use of Legal Entity Identifiers (LEIs) is also mandated under ISA 2025, ensuring accountability for all entities engaged in market activities and enabling seamless integration with global financial systems.
6. Criminalization of Ponzi Schemes and Unregulated Investment Operators
In direct response to Nigeria’s surge in fraudulent investment schemes, ISA 2025 explicitly criminalizes Ponzi operations, imposing severe penalties for those promoting illegal schemes.
According to the Director-General of the Securities Exchange Commission, this provision enables the Commission to “come against bad operators in the industry and ensure that people are more confident and happier to invest in the Nigerian market,” with an enhanced investor protection mandate.
7. Surveillance and Enforcement Modernized for Digital Markets
ISA 2025 significantly upgrades the SEC’s powers to investigate and prosecute digital market misconduct. New enforcement tools include:
- Digital surveillance systems
- Asset freezing powers
- Prosecution of market manipulation in token trading
These updates ensure that activities like fake trade volumes, insider trading involving digital assets, and pump-and-dump schemes fall squarely within SEC’s enforcement reach.
8. Regulatory Sandboxes and Support for Innovation
A notable innovation is the SEC’s authority to implement regulatory sandboxes, graduated compliance models, and incubation support for early-stage startups. This is especially important for FinTechs targeting underserved populations and informal sectors.
For example, ISA 2025 formally recognizes informal community-based schemes such as Esusu, integrating them into Nigeria’s capital market framework.
9. Global Alignment: Competing on a World Stage
By recognizing digital assets and standardizing VASP registration, Nigeria joins progressive jurisdictions such as:
- South Africa (via FSCA licensing of crypto operators)
- Singapore (under the MAS Payment Services Act)
- United Kingdom (with FCA registration requirements for digital custodians)
This alignment positions Nigeria as a hub for venture capital, blockchain infrastructure, and international FinTech partnerships.
Conclusion: A New Era of Inclusive, Technology-Driven Investment
The Investment and Securities Act 2025 is more than just legislative reform—it is a strategic framework for innovation, transparency, and investor protection in the digital age. For Nigeria’s FinTech community, the Act brings long-awaited clarity and opportunity, enabling them to operate with legal certainty, scale sustainably, and access new forms of capital.
At AEO Law Practice, we welcome these developments as an essential tool for next-generation investing. We are committed to supporting our clients—including startups, investors, and institutional stakeholders—with regulatory compliance, structuring, and legal advisory.
To help businesses take advantage of these changes, we are launching a Business Intelligence Resource Stack—a curated legal and compliance toolkit for VASPs, DISPs, blockchain-based finance providers, and startups entering the regulated investment space.
Interested? Send an email with the caption “Business Intelligence Resource Stack” to info@aeolawpractice.com and we’ll be happy to share!
Adeola Osifeko LLB, LLM, ACIS, ABR
Partner, AEO Law Practice
Corporate Commercial | Regulatory & Compliance Practice Group
www.aeolawpractice.com
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