By Biola O. Pedro
INTRODUCTION; On the 12th of April, 2025, news broke about the alleged collapse of a digital investment platform known as CBEX (Crypto Bridge Exchange), with preliminary reports indicating losses amounting to over $900 Million (N1.4 trillion) incurred by investors.
For context, CBEX is a digital trading asset platform that promised investors a 100% Return On Investment (ROI) in 30 days. Its purported goal was to create a secure and transparent environment for transactions. Its operational model had come under intense scrutiny, as allegations of fraud and deceptive practices had begun to emerge.
The platform allegedly falsified withdrawal records to mask the difficulties users encountered when trying to access their funds. The digital trading platform initially crashed after the money in their investors’ digital wallets simply vanished.
The devastating size of the losses did not come as a surprise to industry experts, given how popular this particular investment scheme has been with average Nigerians for quite some time. It follows a myriad of failed investment schemes that promise unrealistic returns to Nigerians, only to subsequently flatter to deceive.
The platform subsequently released a statement that trading has since commenced on its portal, but the sudden and stunning collapse of CBEX has prompted more questions than answers: Who authorized (and licensed) the platform to deal with (and continue to deal with) investor funds?
What sort of protections were in place to protect unsuspecting and uninformed Nigerian investors? And more importantly, who is going to be held accountable for the unconscionable loss suffered by average Nigerians?It is against this backdrop that the timeliness of the passage of the new Investment and Securities Act into law cannot be overstated.
In March 2025, President Bola Ahmed Tinubu signed the Investments and Securities Act (ISA) 2025 into law, ushering in a new era in Nigeria’s capital market regulation. This legislation repealed the Investments and Securities Act No. 29 of 2007, and has introduced significant reforms to align Nigeria’s regulatory framework with global best practices.
The ISA 2025 addresses critical developments in Nigeria’s evolving financial ecosystem- most notably the emergence of digital assets, fintech innovations and the complexities of cryptocurrency and foreign exchange (forex) trading. This reform is a direct response to sustained calls from industry stakeholders for a modernized, efficient and investor-friendly regulatory environment.
As a consequence of this amended Act, the scope and depth of the Securities and Exchange Commission’s powers have expanded tremendously. SEC has the power to enforce stricter penalties, and they also have the capacity to act expeditiously without worrying about judicial bottlenecks. By strengthening investor protection, improving market transparency and expanding the regulatory purview of the Securities and Exchange Commission (SEC), the Act aims to reinforce public confidence and attract both local and foreign investments. This publication critically examines the salient innovations of the ISA 2025. It draws comparisons with the repealed legislation and evaluates its anticipated impact on market participants, particularly within the digital asset and fintech sectors.2.0.
BRIEF OVERVIEW OF SECURITY AND INVESTMENT REGULATION IN NIGERIA. Whilst the regulation of securities investment in Nigeria dates back to the pre-independence era, a more structured framework began to take shape with the promulgation of the Investment and Securities Decree No. 45 of 1999, enacted on the 26th of May, 1999. Following the return to democratic governance and the enactment of the 1999 Constitution, the Decree was re-enacted as an Act of the National Assembly and the Investment and Securities Act (ISA) 1999, thereby repealing the earlier Decree No. 45 of 1998.The 1999 Act formally re-established and strengthened SEC as the apex regulator of Nigeria’s capital market.
It conferred broad powers on SEC, including the registration of securities, regulation of market participants, oversight of stock exchanges and the surveillance of market operations. A fundamental provision of the ISA 1999 was the general prohibition of the public issuance of securities without the prior filing and registration of a prospectus or similar offering document with the SEC.
This provision laid the foundation for the principle that all securities offered to the public must be duly registered to ensure market transparency and investor protection.The ISA 1999 was reviewed and amended, and the ISA 2007 was subsequently passed to law. At the Investments and Securities Act of 2007 in Nigeria brought significant changes to the country’s capital market regulations. It served as the principal legal framework for the regulation of securities, capital market institutions and investor protection in Nigeria for over 17 years. Over time, several deficiencies and limitations became evident. Chief amongst them was the Act’s inability to cater to novel investment vehicles like blockchain powered assets, peer-to-peer (P2P) investment platforms and artificial intelligence-driven financial advice tools.
The advent of digital financial services including cryptocurrency exchanges, tokenized assets and algorithm-based forex trading drastically outpaced the regulatory provisions under the 2007 Act. This regulatory gap left both regulators and investors vulnerable, with growing incidences of fraud, unregulated investment schemes and illicit financial flows through virtual platforms.Over the last few years, stakeholders across the financial and legal sectors have been calling for a comprehensive reform of the ISA to address these gaps.
The clamor for change was further fueled by the surge in high-risk investment offerings, digital Ponzi schemes, and crypto-related ‘opportunities’ that thrived in the absence of enforceable oversight.The ISA 2025 is the legislative response to these concerns. It provides clarity on the regulatory status of digital assets, and it vests broader powers in the SEC. The new Act reflects a shift from reactive to proactive regulation, and is not only aimed at curbing abuses, but also nurturing innovation within a robust legal framework.
It is the product of extensive consultation, policy revision and a deliberate attempt to future-proof Nigeria’s investment landscape in the face of ongoing technological disruption.3.0. MAJOR HIGHLIGHTS OF THE INVESTMENTS AND SECURITIES ACT, 2025The Investments and Securities Act (ISA) 2025 represents a major shift in Nigeria’s capital market regulation, and is aimed at closing the regulatory gaps that limited the effectiveness of the repealed ISA 2007.
The new legislation aligns more closely with global best practices, and is tailored to address the evolving complexities of digital finance, market participation and investor protection. Broader and Clearer Powers of the SECSEC remains the apex capital market regulator with better enforcement tools to combat violations under ISA 2025. Under ISA 2007, SEC had limited powers to regulate instruments that fell outside traditional definitions of “securities.” The ISA 2025 addresses this by broadening the definitional scope of securities to include virtual and derivative instruments, thereby providing clearer regulatory powers. SEC now has full jurisdiction to regulate, investigate and enforce compliance across both traditional and non-traditional securities markets, thereby eliminating jurisdictional grey areas that previously hindered regulatory action. These added powers help SEC ensure compliance, and also bolster investor confidence whilst maintaining market integrity through transparency, as well as stronger rule enforcement and proactive regulatory interventions when needed.Regulatory Scope Expansion, Inclusion of Digital Assets and Virtual Investment PlatformsOne of the most significant developments under the ISA 2025 is the formal recognition and regulation of digital assets including cryptocurrencies, non-fungible tokens (NFTs) and other virtual investment instruments.
Whilst the ISA 2007 made no express provision for digital assets (largely due to their nascency at the time), the new Act expressly brings blockchain-based financial products and online investment platforms within the regulatory orbit of the Securities and Exchange Commission (SEC). This development allows SEC to register, license and supervise digital asset exchanges, wallet providers, token issuers and blockchain investment facilitators, thereby ensuring greater accountability and investor protection in the digital finance space.Mandatory Licensing and Registration for Digital Platforms and InfluencersThe new Investment and Securities Act (ISA) 2025 introduces a mandatory licensing regime for all individuals and platforms involved in offering or promoting securities to the public- particularly through online channels.
This includes investment influencers, digital marketers, token issuers, and platform-based financial advisors. By requiring these actors to register with the Securities and Exchange Commission (SEC), the Act aims to curb the growing prevalence of unregulated online investment schemes and Ponzi schemes, particularly those propagated via social media and digital advertising. These schemes often exploit regulatory gaps to deceive unsuspecting investors.
This measure is expected to enhance transparency, ensure traceability and promote greater discipline within the capital market.Furthermore, the Act (as amended) grants SEC with the authority to request relevant information or documentation from capital market participants when necessary to monitor systemic risks. Failure to adhere to these regulations attracts significant penalties. For example, operators of illegal investment schemes (including Ponzi schemes) risk a minimum fine of ₦20 million, imprisonment for up to 10 years, or both. The enforcement measures are part of a broader strategy to deter noncompliance and dismantle the operational frameworks of fraudulent investment schemes including digital Ponzi schemes.Enhanced Enforcement Powers and SanctionsThe Investment and Securities Act (ISA) 2025 introduces significantly enhanced enforcement provisions compared to the preceding Act. Specifically, it equips the Securities and Exchange Commission (SEC) with a broader and more robust set of regulatory tools to address infractions within the Nigerian capital market. These enhanced tools include the power to impose administrative sanctions, freeze assets, suspend operations and publicly blacklist non-compliant individuals or entities involved in capital market violations.
The Act institutionalizes inter-agency cooperation, and as a consequence empowers the SEC to collaborate more closely with the Economic and Financial Crimes Commission (EFCC), the Central Bank of Nigeria (CBN) and other relevant regulatory and law enforcement bodies. This strengthened collaborative framework is specifically designed to enhance the detection, investigation and dismantling of fraudulent investment schemes including Ponzi schemes and digital asset scams. By reinforcing coordination across regulatory agencies, the ISA 2025 aims to bolster investor protection, restore market confidence and safeguard the integrity of Nigeria’s financial ecosystem.Strengthening the Investments and Securities Tribunal The Investment and Securities Act (ISA) 2025 brings significant reforms to the Investments and Securities Tribunal (IST), enhancing its authority and operational efficiency in resolving capital market disputes. Notably, the Act increases the number of Tribunal members from 10 to 12, reflecting the need for a broader pool of expertise in addressing complex market issues.
The Act provides clearer definitions for the Tribunal’s composition, and outlines the specific criteria for appointing the Chief Registrar, which ensures greater clarity and consistency in its operations.These reforms aim to enhance judicial efficiency by streamlining processes and enabling faster dispute resolution. With a more autonomous structure and well-defined operational procedures, the Tribunal is better positioned to safeguard investors’ rights, uphold justice and maintain market confidence. In doing so, it ensures that capital market participants are treated fairly, while reinforcing the integrity and credibility of Nigeria’s capital market.Use of Legal Entity Identifier (LEI)A major innovation is the compulsory use of Legal Entity Identifiers (LEIs) in market transactions. Issuers and major investors must obtain LEIs to complete transactions.
This requirement enhances transparency and facilitates easier tracking of global financial transactions. Regulators can now efficiently trace ownership and trading history whilst reducing risk. LEI serves as a universal ID for financial entities. It ensures market accountability, better supervision and alignment with international compliance practices.Transfer of Unclaimed Dividends into a Trust Fund The Act mandates that unclaimed dividends be deposited into a trust fund overseen by the Securities and Exchange Commission. Any unauthorized handling incurs a fine of ₦10 million and an extra ₦50,000 daily until the issue is resolved. This provision ensures that unclaimed dividends are protected, managed transparently and preserved for rightful owners, whilst penalizing misconduct with strict financial penalties to encourage compliance.
CONCLUSION: The Investments and Securities Act, 2025 ushers in a new era for Nigeria’s capital market by addressing emerging trends in digital finance and expanding the regulatory reach of SEC. With stronger enforcement tools, mandatory licensing and enhanced investor protections, the Act strikes a deliberate balance between innovation and oversight. If effectively implemented, it will strengthen market integrity, restore investor confidence and position Nigeria as a competitive and resilient player in the global financial ecosystem.
(About the Author,)
Biola O. Pedro is a licensed attorney and solicitor with over 15 years’ experience working on complex public and private sector transactions and projects.
His areas of expertise span real estate, capital markets, medical negligence, hospitality and oil & gas, among others. As a consultant, he has focused primarily on developing strategies for government agencies and parastatals at the federal, state and local/municipal levels worldwide.
In addition to being a member of the Nigerian Bar as a Solicitor & Barrister of the Supreme Court of Nigeria, Pedro is also an active member of the Washington D.C Bar Association and a member of the SK Canadian Law Society as a legal Consultant.)
