1. Introduction
Real estate has traditionally been associated with physical property, paper-based documentation and conventional financing. However, the rapid development of technology is beginning to challenge some of these known traditional structures, such as the use of blockchain technology and digital assets in real estate investment.2
This entails an investor who holds cryptocurrency and wishes to invest in a property to transfer digital assets to the property owner in exchange for the property. However, it is not that straightforward.
A more sophisticated model involves the use of a Special Purpose Vehicle (SPV) which acquires and holds the property, while investors acquire shares or other legally recognised interests in the SPV. Those interests may subsequently be represented digitally through blockchain-based tokens (tokenisation).
In this structure, the blockchain does not necessarily replace the legal ownership structure of the property. Instead, it operates alongside it. The property continues to be legally owned by the SPV, while the blockchain is used to record, represent or facilitate transactions involving investors’ interests in the SPV.
With Nigeria’s regulatory framework3 increasingly recognising virtual and digital assets, this model raises an important question for the real estate sector, whether blockchain and tokenisation provide a practical means of widening access to real estate investment in Nigeria without altering the fundamental legal requirements for acquiring and holding land.
2. Special Purpose Vehicle
A Special Purpose Vehicle, also known as an SPV is a separate legal entity established for a specific transaction, project or investment. Talking about real estate, an SPV may be incorporated specifically to acquire and hold a particular property or chain of properties.
For instance, if a property is valued at ₦500,000,000.00, rather than have fifty investors acquire direct interests in the property, a company may be established specifically for the transaction. In this instance, the SPV becomes the legal owner of the property, and the investors hold interests in the SPV in accordance with the company’s Memorandum and Articles of Association and the terms governing the investment.
It should then be noted that the use of an SPV is therefore not dependent on blockchain, but is an established corporate structuring mechanism. The significance of this in a blockchain-based real estate structure is that the SPV provides the legal bridge between the digital investment and the physical property.
3. Blockchain
Blockchain is a technology which enables transactions and records to be maintained on a distributed digital ledger, and in the context of real estate, one possible application is in the area of tokenisation.
Tokenisation involves representing an asset or an interest in an asset through a digital token. However, the legal effect of the token must be clearly defined. Whether it represents shares in the SPV, whether it confers a beneficial interest, whether it represents a contractual right to a share of income generated from the property, or whether it is merely evidence of an investment contract.
4. How Cryptocurrency Fits into the Structure
For instance, if an investor wants to acquire an interest worth ₦10,000,000.00 in the SPV but holds cryptocurrency rather than Naira, the transaction could potentially be structured so that the cryptocurrency is transferred through an appropriate digital asset intermediary or other regulated mechanism and converted into fiat currency where necessary. The important point to note is that the property seller does not necessarily have to receive cryptocurrency directly.
The cryptocurrency can form part of the funding or settlement mechanism while the underlying property transaction is completed using the conventional legal and financial model applicable to the acquisition of land.
5. How the Seller Actually Gets Paid
The SPV structure becomes really important here. If a property owner (vendor) agrees to sell a property to an SPV (purchaser) for ₦500,000,000.00, it means the SPV needs to raise that sum. Now, rather than obtaining the entire amount from one investor, what the SPV could do is to potentially raise funds from several investors who would provide the funds through the approved investment structure.
Where an investor uses a virtual asset, the digital asset may be converted into Naira through an appropriately regulated channel, and the resulting funds are then applied towards the acquisition of the property.
6. The Nigerian Regulatory Position
Nigerian laws have now recognised virtual and digital assets. One of which is the Investments and Securities Act 2025,4 which now expressly includes virtual and digital assets within the statutory definition of “securities”.
More significantly, the Second Schedule to the ISA 20255 expressly lists virtual assets, digital assets and other distributed ledger technology (DLT) offers, tokens and products as recognised types of investments in Nigeria.
This is significant for a tokenised real estate structure because an investment product created around an SPV and represented through digital tokens will now fall within the regulatory framework applicable to securities and investment business, depending on its precise characteristics.
Also, the Securities and Exchange Commission’s (SEC) statutory functions under section 3(3)6 include the registration and regulation of virtual and digital asset exchanges.
Section 617 further provides that a person shall not operate in the Nigerian capital market or carry on investments and securities business unless registered in accordance with the Act and the applicable rules and regulations.
Accordingly, the fact that a real estate investment platform operates through blockchain technology does not place it outside the regulatory framework. If the activities carried on by the platform constitute regulated investment or securities business, the appropriate regulatory requirements must be satisfied.
However, the ISA 2025 goes beyond merely recognising digital assets.
Section 86(1)8 provides that securities to be issued under the Act are to be registered with the Commission, subject to the Act and the applicable rules and regulations. Section 86(5)9 further provides that securities are not to be issued, transferred, sold or offered for subscription or sale to the public without prior registration with the Commission.
Section 87(1)10 is particularly interesting in the context of blockchain because it expressly recognises that securities registered by the Commission may be issued or transferred electronically or through another system approved by the Commission, subject to prescribed conditions. This creates an important statutory foundation for considering technology-based methods of issuing and transferring investment interests.
It does not, however, mean that every tokenised property arrangement is automatically approved. The precise classification of the token, the nature of the rights attached to it, the manner in which it is offered and the activities undertaken by the platform would all have to be examined, especially where the arrangement involves raising money from multiple members of the public in expectation of returns after a period of time.
Therefore, a platform involved in tokenised real estate would most likely have regulatory obligations beyond the incorporation of an SPV.
Furthermore, SEC’s current capital market framework expressly recognises a category known as a Real-World Assets Tokenization and Offering Platform (RATOP).
Under the SEC’s revised minimum capital framework, a RATOP is subject to a prescribed minimum capital requirement of ₦500,000,000 (Five Hundred Million Naira).11
The recognition of a RATOP is significant because real world asset tokenisation is precisely the process of representing interests connected to physical assets, such as real estate, through digital technology. This demonstrates that the concept is no longer merely theoretical from a regulatory perspective.
However, regulatory recognition should not be confused with outright permission. A platform seeking to conduct such activities must still comply with the relevant registration, licensing, disclosure, custody, investor protection and other regulatory requirements applicable to its particular business model.
7. The Role of the Central Bank of Nigeria (CBN)
The Securities and Exchange Commission is not the only regulator relevant to a transaction involving virtual assets. The Central Bank of Nigeria has also developed a regulatory framework concerning banking relationships with Virtual Asset Service Providers (VASPs).
The CBN’s Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs) 2023 recognise activities including the exchange of virtual assets for fiat currency, exchange between different virtual assets, transfer of virtual assets and custody or administration of virtual assets. This is relevant to the proposed real estate structure because the movement from cryptocurrency to Naira is likely to involve an exchange or other intermediary and, ultimately, the banking system.
Consequently, the realisation of a crypto funded real estate transaction depends not only on whether the investment product itself complies with securities regulation, but also on whether the payment and settlement arrangements comply with the applicable financial sector requirements.
8. Benefits of Tokenised Real Estate
The principal attraction is potentially fractional ownership or investment because a properly structured investment vehicle could potentially allow several investors to participate with smaller amounts.
It may also facilitate a fractional participation in larger real estate projects, access to a broader pool of investors, improved transparency of transaction records, easier monitoring of investment interests, and potential access to investors outside Nigeria.
9. The Risks and Legal Challenges of Technology in Real Estate Transactions
The model nevertheless presents significant legal and commercial challenges.
9.1 Regulatory Approval and Compliance
Depending on the structure and the nature of the digital assets involved, tokenised real estate transactions may be subject to regulatory requirements, especially with the recognition of digital assets by the ISA 2025. Hence, compliance with the requirements of regulators such as the SEC and, where applicable, the CBN may require registration, licensing, approvals and ongoing compliance. These regulatory requirements would most likely increase the cost of such property transaction, the complexity of such transaction, and even the time involved in implementing the tokenised model, which may discourage its adoption at the end of the day.
9.2 Investor Rights and Protection
Investors must understand what rights they are acquiring. A token should not merely be marketed as payment for part of a property without explaining the legal nature of the interest represented. The underlying documentation should address matters such as voting rights, distributions, redemption, transfer, valuation, exit mechanisms, amongst others.
9.3 Price Flunctuation
Cryptocurrency values can fluctuate significantly. For instance, if an investor agrees to provide cryptocurrency equivalent to ₦10,000,000.00, the transaction documents should clearly identify the applicable valuation point, exchange rate mechanism and treatment of fluctuations between payment and settlement. Otherwise, a transaction intended to raise ₦10,000,000.00 could result in uncertainty as to whether the required amount has actually been received.
9.4 Source of Funds Verification and AML (Anti-Money Laundering) Compliance
Digital asset transactions also create important source of funds and anti-money laundering considerations. The parties must be able to establish the identity of investors and the legitimacy of the funds being introduced into the investment structure. The use of cryptocurrency does not remove these obligations.
9.5 Digital Asset Custody and Security
Where tokens and digital assets are involved, custody of private keys and digital assets become another important consideration. A loss of access to a wallet, compromise of a private key or technological failure could have serious financial consequences. The legal structure must therefore be supported by appropriate technological and custodial arrangements.
9.6 Legal Rights and Remedies
If an investor challenges the value of a token, or the investor loses access to a wallet or alleges that the underlying property has been improperly dealt with, the parties must be able to identify the applicable contractual and legal rights. Although the blockchain may provide a record of transactions, it does not determine the parties’ legal remedies.
10. Conclusion
Nigeria’s legal framework is increasingly accommodating this technological development of using cryptocurrency in real estate transactions, as already established.
Nevertheless, technological innovation does not displace existing Nigerian property law. Consequently, the SPV must acquire and hold the property in accordance with applicable Nigerian land laws. Also, digital asset activities must comply with the applicable regulatory framework, and payment and settlement arrangements must be capable of operating within the banking and financial regulatory system of Nigeria.
Ultimately, the strongest proposition is that while blockchain may provide a new technological layer through which real estate investments can be structured, funded and transferred, blockchain does not replace traditional real estate transactions, for now or ever.
Hence, the future of real estate may therefore not be a choice between traditional property transactions and blockchain. It could be a combination of both.
Footnotes
1 Hilda Omono Okoduwa, Associate, Real Estate & Succession Department, S.P.A. Ajibade & Co., Lagos, Nigeria.
2 The author acknowledges a prior professional discussion with Barrister Tayo Omojesho which prompted the initial consideration of the application of SPV and blockchain structures to real estate investment.
3 The Investment and Securities Act 2025 (ISA 2025), and the CBN’s Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs) 2023.
4 ISA 2025.
5 The Second Schedule, Part I, section 4-5 of the Investments and Securities Act 2025.
6 ISA 2025.
7 Ibid.
8 Ibid.
9 Ibid.
10 Supra.
11 Amarachi Okonkwo, ‘SEC proposes ₦30m registration fee, ₦2bn capital requirement for digital asset firms’ The Guardian Newspaper (23 August 2026) available at (https://guardian.ng/news/sec-proposes-n30m-registration-fee-n2bn-capital-requirement-for-digital-asset-firms/) accessed 3rd September 2026.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
