Music Royalties, Blockchain & Regulation: Nigeria’s Investment and Securities Act 2025

To update Nigeria's capital market rules to match global standards, keep up with changes within this sector in the past 18 years, protect investors better, and make the market more transparent, the Investment and Securities Act of 2025 (ISA) was signed into law in March 2025. It replaces the Investment and Securities Act of 2007. Although the Act is widely hailed as a welcome development for Nigeria’s capital market, our focus today is on how this legislation might redefine the way Nigerian artists earn and diversify their music royalties.

The Unfolding Legal Status of Digital Assets in Nigeria

Nigeria’s stance on digital assets has undergone quite a transformation. From the Central Bank of Nigeria (CBN) issuing warnings about the risks of cryptocurrency use and its potential for illicit use, to an outright ban in 2021, the country seemed to be closing the door on virtual currencies.

However, between 2023-2024, there was a gradual easing of policies with introduced guidelines for Virtual Asset Service Providers. And in 2025, a law that expressly recognizes digital assets as securities.

Digital Assets as Securities

With this new legal status, digital assets—including cryptocurrencies, Non-Fungible Tokens (NFTs), and tokenized assets- are now considered securities. This automatically places Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the regulatory scope of the Securities and Exchange Commission (SEC). 

In simple terms, this means platforms involved in blockchain technology, crypto exchanges, and NFT marketplaces are now regulated by the SEC. Which may include guidelines for their registration, licensing, and tax reporting. For investors, it ensures greater transparency and legal protection for their digital investments. 

How the Act Could Impact Music Royalties

It’s no secret that the process of royalty distribution could be complex, from inefficient collection systems, delayed payments, to poor data tracking; there are quite a few challenges. Accurately monetizing streams, downloads, and usage across platforms can be daunting.

However, as we’ve always advocated here, technology is offering ways to fix this. While still in its early stages in Nigeria, other countries have already begun exploring how blockchain can enhance accountability and efficiency in royalty distribution.

Tokenizing Music Assets

The tokenization of music rights is a concept that involves converting ownership of a song or album into tradable digital tokens, each representing a fractional stake in the asset. These tokens can be bought, sold, and used to automate royalty distribution based on token ownership.

DJ and producer 3LAU (Justin Blau) founded a company called Royal.io (not to be confused with Royalti.io) that allowed fans the opportunity to purchase Limited Digital Assets (LDAs) tied to streaming royalties. Other platforms like Opolous also champion the idea of tokenized music assets.

Additionally, artists can mint exclusive versions of their songs as NFTs and sell them through blockchain-based platforms like Catalog,  where collectors can purchase them. 

Blockchain Technology for Royalty Data

The potential of blockchain goes beyond tokenization. It can be used to create a unified royalty database capable of accurately tracking streams and downloads in real time. These developments could diversify music income streams and attract new investors into the music space.

Moving Forward: Expectations and Challenges

By giving digital assets legal recognition, the ISA 2025 lays the foundation for broader blockchain adoption in music royalty management in Nigeria. It introduces alternative payment avenues, such as crypto-enabled royalty settlements or trading platforms for music rights.

Since these platforms will be regulated by the SEC, the digital assets market is likely to become more stable and investor-friendly.  This could draw interest from institutional investors interested in exploring music as an asset class.

Challenges 

While the Act provides a legal foundation, clear, enforceable standards for the use of digital assets in royalty systems still need to be developed. There is a need to address how digital asset ownership can coexist with existing copyright laws.

There is also a need for education. Enlightening industry players on the potential of digital assets as the likely future of music rights and the diversification of royalty streams, especially in light of ongoing conversations about the earning disparities between Nigerian artists and their global counterparts.  

Additionally, Widespread adoption will only happen if there’s investment in blockchain infrastructure, databases, smart contracts, and secure marketplaces that support these new models.