In Nigeria, the rise of decentralized applications (dApps) has caught the attention of regulators. Given the disruptive nature of blockchain technology and cryptocurrencies, ensuring compliance with the country's legal framework is critical for developers aiming to bring their dApps to the public. This article explores how to acquire the necessary license for a dApp in Nigeria, where to go, and how much it costs.

Understanding the Nigerian Regulatory Framework for dApps

The regulatory landscape in Nigeria is evolving, particularly around blockchain, cryptocurrency, and fintech solutions. The major regulatory bodies involved include:

• Central Bank of Nigeria (CBN): Oversees financial services and crypto-related activities.
• Securities and Exchange Commission (SEC): Regulates investments and token offerings.
• National Information Technology Development Agency (NITDA): Responsible for data protection and IT development.
• Corporate Affairs Commission (CAC): Regulates the registration of business entities, including those offering blockchain services.

Before launching your dApp, ensure your project complies with the Nigerian Data Protection Regulation (NDPR), financial transaction guidelines, and any anti-money laundering (AML) or counter-terrorist financing (CTF) provisions from the CBN and SEC.

Read more on this article; Navigating Regulatory and Legal Compliance for Tech Startups in Nigeria: A Guide for Founders

Types of Licenses Required for dApps

Depending on the type of dApp you are developing, here are some licenses you may need:

Fintech or Financial Service dApp: If your dApp involves cryptocurrency trading, lending, or any form of financial transactions, you will need licenses from the CBN and SEC.

• CBN License: This may include a Payment Service Provider (PSP) license for apps dealing with payment transactions.
• SEC License: If your dApp involves token sales (Initial Coin Offerings or ICOs), the SEC may classify your tokens as securities. You'll need a securities trading license.

Data-Driven dApps: dApps that handle users' personal data will need to comply with the NDPR and may require approval from NITDA.

• NDPR Compliance: This mandates data protection measures, privacy policies, and consent management.

Where to Acquire These Licenses

• Central Bank of Nigeria (CBN): Visit the CBN’s official website to apply for financial services licenses. The process usually requires submitting detailed business plans, proof of capital, and compliance documentation. Licenses are categorized under the Payment Systems framework, including mobile money operators, payment solution service providers, etc.

• Securities and Exchange Commission (SEC): The SEC requires blockchain-based projects involving tokenized securities to register their offerings. Visit the SEC website for guidance on registering your token as a security and obtaining the necessary licenses.
  

• National Information Technology Development Agency (NITDA): For data-driven dApps, registration and certification under the NDPR can be done through the NITDA platform.

• Corporate Affairs Commission (CAC): Your company will need to be officially registered. Incorporate your business as a legal entity through the CAC portal.

Steps to Acquiring a License

Incorporate Your Business

Start by registering your company as a limited liability company through the CAC portal. You'll need to submit your business name, directors, share capital, and memorandum of association.

• Cost: Incorporating a company in Nigeria costs around ₦50,000 to ₦100,000 for small businesses but varies with capital.

CBN Application for Fintech dApps

• Documents Required: Submit detailed business plans, proof of adequate financial backing, and an audit of your IT systems for security compliance.
• Cost: Licensing fees can range from ₦2 million to ₦5 million depending on the scope of the financial services.

SEC Application for Token Sales

• Documents Required: Provide a whitepaper for the ICO or token sale, business plans, risk analysis, and technical details of the project.
• Cost: Filing fees for securities licenses can range from ₦50,000 to ₦1 million depending on the complexity of the offering.

NDPR Compliance

• Documents Required: You’ll need a data protection policy and user consent protocols, among other privacy measures.
• Cost: NITDA certification may cost between ₦50,000 to ₦500,000 depending on the level of data processing involved.

Consult with Legal Experts

Navigating the licensing process can be complex, so it is advisable to consult with legal professionals who specialize in blockchain technology and Nigerian fintech regulations. They can help ensure full compliance and streamline the application process.

Conclusion

Acquiring a license for your dApp in Nigeria involves multiple steps depending on the type of dApp you are developing, ranging from company incorporation to regulatory approvals from the CBN, SEC, and NITDA. The costs vary significantly based on the scope of your dApp’s operations. Proper legal guidance can help you ensure smooth approval and compliance with Nigeria's regulatory framework.

Article by: Mana Lamja