Cryptocurrency Transactions Remain Legal in Nigeria, but Bank Disagreements May Result in Complications
Nigeria has taken a significant step forward in regulating cryptocurrencies, recognising them as securities under the Investments and Securities Act (ISA) 2025. However, the path to a clear, consistent, and unified approach to crypto regulation in the country is still fraught with challenges.
The ISA 2025 places cryptocurrencies under the regulatory purview of the Securities and Exchange Commission (SEC), classifying them as securities. This move grants the SEC authority over crypto asset service providers and platforms, such as virtual asset service providers (VASPs), digital asset operators (DOPs), and digital asset exchanges (DAEs), who must register and obtain authorisation from the SEC.
However, the national banks still hold the power to restrict transactions involving cryptocurrencies. This was evident in the restrictions implemented by the Central Bank of Nigeria (CBN) in 2021, which led to a shift towards peer-to-peer transactions. This disconnect between the SEC and the CBN's stance on crypto has left some users and businesses in a regulatory limbo.
To achieve a clear, consistent, and unified approach to crypto regulation, Nigeria needs to take several steps. A unified regulatory framework should be established, with all regulatory bodies, including the CBN and the SEC, working together to ensure their policies align and provide a cohesive framework for cryptocurrency use and regulation.
Clear guidelines should be established regarding the role of national banks in facilitating or restricting cryptocurrency transactions to avoid confusion and facilitate smoother adoption. Public awareness campaigns can help educate both consumers and businesses about the legal status and safe use of cryptocurrencies, reducing the risk of misuse and scams.
International cooperation is also crucial for Nigeria to align its crypto regulations with global standards, promoting trust and stability in the market. The regulatory framework should be regularly reviewed and updated to keep pace with the evolving nature of cryptocurrencies and blockchain technology.
Advocacy groups in Kenya regularly submit policy proposals and maintain open dialogue with regulators to seek clarity and shape how rules evolve, a practice that Nigeria needs to adopt. Improved communication between the crypto community, business leaders, and civil society is necessary for engaging policymakers in Nigeria, similar to what is happening in Kenya.
Countries offering clear, unified regulations often gain a competitive advantage in attracting crypto companies seeking regulatory stability. South Africa, for instance, has introduced clearer rules around investor protection, compliance, and taxation in the crypto industry, leading firms like Kotani Pay to register due to predictable rules.
The CBN never clearly endorsed crypto, leaving a gap between what the law implies and how the system behaves. Despite the law, banks continue to flag accounts, and arrests haven't stopped regarding crypto activities. The Central Bank of Nigeria (CBN) barred financial institutions from facilitating crypto transactions in 2021, but quietly lifted the ban in 2023.
However, until the system in Nigeria speaks with one voice, the legality of crypto in the country remains unclear. Until a consistent and clear policy is enforced, Nigerians may continue to face harassment or arrest for participating in a sector the government now claims to support.
- Recognizing cryptocurrencies as securities under the Investments and Securities Act (ISA) 2025 places them under the Securities and Exchange Commission (SEC)'s regulatory purview, granting them authority over crypto asset service providers.
- The Securities and Exchange Commission (SEC) has the power to regulate virtual asset service providers (VASPs), digital asset operators (DOPs), and digital asset exchanges (DAEs), who must register and obtain authorization from the SEC.
- Meanwhile, the Central Bank of Nigeria (CBN) retains the power to restrict transactions involving cryptocurrencies, as demonstrated by the restrictions implemented in 2021.
- To achieve a unified approach to crypto regulation, a unified regulatory framework should be established, with the CBN and SEC working together to ensure their policies align and provide a cohesive framework for cryptocurrency use and regulation.
- Clear guidelines should be established to avoid confusion regarding the role of national banks in facilitating or restricting cryptocurrency transactions.
- International cooperation is essential for Nigeria to align its crypto regulations with global standards and promote trust and stability in the market.
- A proactive approach to policy creation, similar to that adopted by advocacy groups in Kenya, is necessary in Nigeria, engaging policymakers in dialogue and seeking clarity on evolving regulations.
