Nigeria's Central Bank is not waiting for the crypto industry to outgrow its oversight. On August 12, the Central Bank of Nigeria (CBN) opened applications for Cohort 2 of its Regulatory Sandbox Programme, formally bringing virtual asset service providers β including stablecoin issuers, wallet providers, and payment processors β under structured regulatory testing for the first time.
The application window runs until August 31, and the programme covers two distinct tracks. The first is a Virtual Asset Service Provider (VASP) track, targeting companies offering stablecoins, payment and settlement services, custody solutions, wallet management, and related financial infrastructure. The second is a Data-Enabled Financial Services (Non-VASP) track, designed for firms using secure digital infrastructure and permission-based data sharing to improve payments, credit, risk management, operational efficiency, and financial inclusion.
Who Regulates What
The sandbox formalises a regulatory split that is been taking shape behind the scenes. The CBN will now oversee virtual assets used for payments β including stablecoins, settlement systems, custody platforms, and wallet services. The Nigerian Securities and Exchange Commission (SEC), meanwhile, retains authority over digital assets that function like securities.
This division did not emerge in a vacuum. On July 18, President Bola Tinubu signed an Executive Order creating a harmonised regulatory authority under a Virtual Asset Council, which the CBN now chairs. The SEC and the Nigeria Revenue Service (NRS) serve as vice-chairs on the council. The NRS had released its own tax framework for virtual assets just days earlier, on August 3.
Built on Earlier Groundwork
The CBN did not arrive here cold. Back in March, the bank began piloting its supervisory approach with a select group of fintechs β Flutterwave, Paystack, and Juicyway β specifically to assess the stability of payment and cross-border transaction infrastructure linked to stablecoins under closer regulatory monitoring. That pilot informed what is now a broader, more formalised framework.
The new sandbox is expected to admit stablecoin providers, on- and off-ramp companies, payment processors, settlement infrastructure operators, custody platforms, and wallet-service providers β essentially the full stack of firms that support the movement, storage, and conversion of digital assets in Nigeria.
"The CBN Regulatory Sandbox provides a controlled environment in which eligible participants may test innovative financial products, services, business models, and enabling technologies under the supervision of the Central Bank. The programme enables the CBN and innovators to engage constructively throughout the testing process, supporting regulatory learning while encouraging responsible innovation that benefits consumers and the wider financial system." β Sidi-Ali Hakama, CBN Acting Director of Corporate Communications
A Crowded But Maturing Regulatory Space
Nigeria's virtual asset regulation has historically been fragmented, with multiple agencies occasionally overlapping in their claims over digital finance. The new architecture β a tech-forward framework anchored by the Virtual Asset Council β attempts to fix that by assigning clear jurisdictional lanes to the CBN, SEC, and NRS.
The SEC's ARIP, which admitted nine digital asset investment firms in July, now has a counterpart on the payments side. Together, they give Nigeria a dual-track testing environment that covers both the investment and transactional dimensions of the virtual asset industry.
It is a significant structural shift. Nigeria has one of Africa's most active crypto user bases, and a regulatory environment that is been playing catch-up for years. The Cohort 2 sandbox β with its explicit VASP track and its grounding in the new Virtual Asset Council β suggests the country's institutions are finally moving to match the pace of the market they are trying to govern. Those interested in how similar digital asset oversight frameworks are evolving across the continent will find Nigeria's model worth watching closely.