Tokenized Assets and Banking Regulation of Deposit Money Banks in Nigeria 291

Tokenized Assets; Banking Regulation of Deposit Money Banks; in Nigeria ELURO; Ifechukwude; EHIEDU; Victor C; PhD

doi:10.56201/ijefm.v10.no9.2025.pg291.309

Tokenized Assets and Banking Regulation of Deposit Money Banks in Nigeria 291

Tokenized Assets and Banking Regulation of Deposit Money Banks, in Nigeria ELURO, Ifechukwude, and EHIEDU, Victor C, PhD

Abstract

This study examined the relationship between tokenized assets and banking regulations of Deposit Money Banks (DMBs) in Nigeria, focusing on Value of Tokenized Asset Transactions (VTAT), Risk-Weighted Asset Exposure to Tokenized Products (RWAETP), Liquidity Coverage Ratio (LCR), and Regulatory Compliance Costs (RCC) between 2015 and 2024. An ex-post facto design was adopted, and secondary data were sourced from the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Nigeria Inter-Bank Settlement System (NIBSS), and annual reports of 15 purposively selected DMBs. The data were analyzed using panel least squares regression in E-Views 9.0, supported by diagnostic tests, panel unit root, Pedroni cointegration, and Hausman specification tests to ensure robust results. Findings revealed that VTAT exerted a positive and significant effect on RCC, indicating that expanding tokenized transactions increased compliance costs due to the need for additional anti-money laundering frameworks and disclosure obligations. RWAETP, though positive, was statistically insignificant, suggesting that tokenized exposures were still nascent and had not yet generated material compliance costs relative to traditional banking risks. Conversely, LCR demonstrated a strong and highly significant positive impact on RCC, showing that Basel III liquidity compliance placed a heavy burden on banks, as maintaining high-quality liquid assets diverted resources away from lending and investment. These results aligned with Financial Intermediation Theory, which emphasized liquidity and risk management as central to banking, and Regulatory Compliance Theory, which explained the cost burdens banks willingly bore to avoid sanctions and safeguard reputation. The study concluded that while tokenized assets presented opportunities for efficiency and diversification, their adoption raised compliance costs, particularly through liquidity regulation.

Keywords

Tokenized AssetsValue of Tokenized Asset TransactionsRisk-Weighted Asset Exposure to Tokenized ProductsLiquidity Coverage Ratio and Regulatory Compliance Costs.

References

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Tokenized Assets and Banking Regulation of Deposit Money Banks in Nigeria 291

Abstract

Keywords

References

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