CBN opens second regulatory sandbox with dedicated track for crypto firms

The Central Bank of Nigeria (CBN) has launched applications for its second Regulatory Sandbox Programme, introducing specialized tracks for virtual asset service providers and data-driven financial services as Nigeria's digital finance landscape evolves. Applications for the second cohort will be accepted from August 12, 2026, to August 31, 2026, according to a CBN statement.

The new cohort will be divided into two tracks: the Virtual Asset Service Provider (VASP) Track and the Data-Enabled Financial Services Track. The VASP Track will facilitate testing of innovations involving virtual assets, stablecoins, payments, settlement, custody, wallets, and related infrastructure through supervised live trials.

Meanwhile, the Data-Enabled Financial Services Track, which does not encompass VASPs, will concentrate on advancements utilizing secure digital infrastructure and permission-based data sharing to enhance financial inclusion, payments, credit, risk management, operational efficiency, and consumer outcomes. The CBN's aim is to foster a transparent, proportionate, and risk-based regulatory environment that encourages innovation while protecting monetary and financial stability.

By assessing insights from supervised testing, the CBN intends to enhance its understanding of emerging technologies and inform the creation of regulatory and supervisory frameworks for Nigeria's rapidly evolving digital financial ecosystem. CBN Director of Payments System Policy Department, Musa Jimoh, highlighted the ongoing transformation in financial services through financial innovation.

The CBN emphasized that applications will be evaluated based on innovation level, preparedness for controlled live testing, potential consumer or market benefit, governance arrangements, risk management capabilities, and the feasibility of the proposed testing plan. Successful applicants will undergo supervised testing under clearly defined parameters agreed upon with the CBN, incorporating consumer protection, operational resilience, cybersecurity safeguards, and regulatory reporting measures.

It is important to note that joining the Regulatory Sandbox does not automatically grant a license or authorization to operate beyond the predetermined testing parameters. Interested applicants are required to submit their applications via the CBN's Regulatory Sandbox Portal (https://sandbox.cbn.gov.ng) before the specified deadline.

The CBN's latest announcement complements the ongoing regulatory measures targeting the crypto industry. In connection with the Securities and Exchange Commission (SEC) Regulatory Sandbox, seven virtual asset companies were granted an approval-in-principle, bringing the total number to nine. The CBN's Regulatory Sandbox was initially launched in 2022, with applications for the first cohort opening in December of that year.

The sandbox officially commenced operations on January 25, 2023, offering fintech innovators a controlled setting to test products, services, business models, and enabling technologies while allowing the regulator to evaluate potential risks and implications prior to broader implementation.