Nigeria’s crypto industry is asking the Central Bank of Nigeria (CBN) to extend the application window for the second cohort of its Regulatory Sandbox Programme, arguing that the current timeline and documentation requirements could disadvantage early-stage local firms.
The Virtual Asset Service Providers Association (VASPA) formally submitted a request to the CBN for an additional 60 to 90 days to complete applications for the sandbox cohort. The group proposed extending the deadline to November 30, 2026, or moving to a rolling or cohort-based application model.
The request came as the initial application window was due to close on August 31, roughly 19 days after applications opened on August 12.
The CBN’s second sandbox cohort includes a dedicated Virtual Asset and Stablecoin Track, covering use cases including stablecoin payments, virtual-asset payments, digital wallets, custody, token-based products, fiat on- and off-ramps, and stablecoin and payment-token exchanges.
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VASPA says application requirements are too demanding
According to VASPA, the application contains 33 sections and 236 questions, alongside documentation that can take weeks or months to prepare.
The association highlighted requirements including penetration testing by a CREST-certified firm, recent independent reserve attestations for stablecoin and token issuers, legal opinions on token classification under Nigeria’s Investments and Securities Act 2025, audited financial statements, data-protection assessments and enterprise-wide AML/CFT/CPF risk assessments.
Applicants may also need to provide a board-approved policy library covering as many as 28 procedures, according to the association.
VASPA argued that the combination of the short application period and extensive documentation requirements could favour companies with established compliance teams and larger financial resources.
The association said the structure “inadvertently favors” well-capitalised foreign entities over indigenous early-stage innovators.
CBN sandbox designed to test emerging financial models
The CBN describes its Regulatory Sandbox as a controlled environment where innovators can test new financial products, services and business models under regulatory supervision.
For Cohort 2, the central bank has specifically created a virtual-asset track intended to support controlled testing of emerging digital-asset and stablecoin models while generating evidence that can inform future supervisory, policy and licensing decisions.
The programme is open not only to existing regulated institutions and VASPs but also to startups and technology companies without existing financial licences, provided their products are sufficiently developed for controlled live testing.
That eligibility makes the accessibility of the application process particularly important for smaller firms seeking their first formal engagement with the regulator.
VASPA proposes broader changes
Beyond requesting more time, VASPA proposed eight changes to the sandbox framework.
These include quarterly or rolling application windows, a two-stage process beginning with an expression-of-interest screening, and proportional documentation requirements based on the risk profile of each VASP.
The association also proposed moving time-intensive requirements such as penetration testing into the sandbox itself rather than requiring them before admission.
Other recommendations include specific guidance for pre-revenue startups, standardised application templates, a data-retention policy, greater coordination between the CBN and Securities and Exchange Commission (SEC), and clearer boundaries around which virtual-asset activities fall under each regulator.
The CBN’s sandbox framework already states that participation does not amount to a permanent licence or authorisation to operate outside approved testing parameters. It also says sandbox participation is separate from other regulatory approvals that may be required.
A test of Nigeria’s crypto regulatory approach
VASPA’s request highlights a broader question facing Nigeria’s emerging digital-asset regulatory framework: how can regulators maintain rigorous safeguards without making supervised innovation accessible only to companies with significant compliance resources?
The CBN has positioned the sandbox as a mechanism for learning alongside innovators and gathering evidence around business models that may not fit neatly within existing rules.
For local crypto startups, the outcome of this application debate could therefore influence not only participation in the second cohort but also how accessible Nigeria’s regulatory pathway becomes for smaller domestic VASPs.
As of publication, VASPA’s request is a proposal for an extension and broader changes to the application process. It does not indicate that the CBN has granted the requested extension.
