Legal Crypto In Nigeria

Cryptocurrencies in Nigeria

Nigeria has emerged as a significant player in the global cryptocurrency market, driven by its young, tech-savvy population and limited access to traditional banking services. The legislative environment and market dynamics surrounding cryptocurrencies have evolved rapidly, with both opportunities and challenges. This article explores the legal status of cryptocurrencies in Nigeria, applicable laws, major exchanges, and the state of decentralized finance (DeFi) and non-fungible token (NFT) markets. It also examines two key themes: the impact of cryptocurrencies on financial inclusion and the challenges of regulatory enforcement.

The Legality of Cryptocurrency in Nigeria

Cryptocurrencies are not considered legal tender in Nigeria and cannot be used for official transactions. However, they are not explicitly illegal, and significant regulatory progress has been made. In December 2023, the Central Bank of Nigeria (CBN) lifted its 2021 ban, allowing banks to process crypto transactions under strict conditions, including robust Know Your Customer (KYC) policies. The Investment and Securities Act (ISA) 2025, signed into law by President Tinubu, classified Bitcoin and other digital assets as securities under the jurisdiction of the Nigerian Securities and Exchange Commission (SEC). This marked a pivotal moment, legitimizing cryptocurrencies while introducing stricter oversight to curb illicit activities.

Laws Governing the Cryptocurrency World

Nigeria’s cryptocurrency regulatory framework is multifaceted, comprising several key laws and institutions:

• Investment and Securities Act (ISA) 2025: Classifies digital currencies as securities, requiring all crypto exchanges and services to obtain an SEC license. It updates the 2007 law to align with global digital asset standards.
• Money Laundering (Prevention and Prohibition) Act 2022: Designates cryptocurrencies as financial instruments, imposing Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) obligations on crypto businesses.
• SEC Regulations: Mandates that crypto-influencers obtain a “no-objection clearance” before promoting digital products, and all exchanges must secure an SEC license.
• CBN Guidelines: Permits banks to facilitate transactions for licensed virtual exchanges, provided they adhere to stringent KYC and transaction monitoring protocols.

Despite these advancements, inconsistencies between banking regulations and the push for innovation persist, as banks often refuse to open accounts for licensed exchanges.

Exchanges and Common Methods of Exchange

Several cryptocurrency exchanges operate in Nigeria, catering to a growing market:

• Binance: Popular for its global reach, though it faced regulatory challenges in 2024 when Nigerian authorities detained its executives over compliance issues.
• Luno: A South Africa-based exchange with a strong Nigerian presence, offering user-friendly interfaces and local currency deposit/withdrawal options.
• Quidax: A Nigerian exchange focused on the African market, compliant with SEC regulations.
• Patricia: A Nigerian platform supporting peer-to-peer (P2P) trading and crypto payment solutions.

P2P trading dominates in Nigeria, facilitated by platforms like Binance and Paxful, which connect buyers and sellers directly via mobile payment apps or bank transfers. This method thrives due to restricted banking access for crypto businesses and offers flexibility for users.

DeFi Market in Nigeria

Decentralized Finance (DeFi) has gained traction in Nigeria, offering intermediary-free financial services like lending, borrowing, and yield farming through platforms such as Uniswap, Aave, and PancakeSwap. With over 40% of Nigerians unbanked and high inflation rates, DeFi is particularly appealing. However, the lack of regulation exposes users to risks like smart contract vulnerabilities and scams. Although Nigeria ranks among Africa’s leaders in DeFi adoption, with significant transaction volumes on Ethereum-based protocols, the SEC has yet to issue specific DeFi regulations, urging users to proceed cautiously.

NFT Market in Nigeria

Nigeria’s NFT market is nascent but growing, supported by a vibrant creative community. Artists and musicians, such as Osinachi, have gained international recognition by monetizing digital art, music, and collectibles on platforms like OpenSea and Rarible. The country’s youthful population drives digital creativity, but challenges include high Ethereum gas fees, limited internet access in rural areas, and regulatory uncertainty. While the SEC’s digital asset framework may eventually encompass NFTs, no specific regulations exist as of May 2025.

Cryptocurrencies and Financial Inclusion

Cryptocurrencies have significantly advanced financial inclusion in Nigeria, where over 60% of the population is under 30 and smartphone penetration is nearly universal. Stablecoins like USDT facilitate low-cost remittances, bypassing hefty fees from traditional money transfer services. P2P trading enables small-scale entrepreneurs to access the global economy. However, regulatory ambiguity and low digital literacy increase the risk of fraud and phishing, posing challenges to widespread adoption.

Challenges in Regulatory Enforcement

Despite regulatory progress, enforcement remains a significant hurdle. Discrepancies between regulators and banks create operational difficulties for licensed crypto firms, such as account access denials. The SEC’s stringent marketing rules for crypto influencers are challenging to enforce in the decentralized digital landscape. Enhanced coordination between the CBN, SEC, and other agencies is critical to ensure industry compliance and resolve the current regulatory limbo.

Facts

• Remittance Market: Nigeria, one of Africa’s largest remittance recipients, saw $21 billion in 2017 (Fitch), with increasing blockchain-based transactions.
• Internet Penetration: Approximately 55% of Nigerians have internet access, essential for crypto adoption, though rural areas lag behind.
• Unemployed Youth: With youth unemployment exceeding 40%, crypto trading and DeFi offer alternative income sources.

Useful Information

Category	Details
Mobile Payment Adoption	Over 70% of Nigerians use mobile money platforms like OPay and PalmPay.
Blockchain Education	Universities like Covenant University offer blockchain courses.
Electricity Access	Only 60% of Nigerians have reliable electricity, impacting crypto mining.

Conclusion

Nigeria stands on the cusp of a cryptocurrency revolution, navigating a complex regulatory landscape. The ISA 2025 and the lifting of the CBN ban mark significant progress, yet banking restrictions and enforcement challenges persist. Popular exchanges and P2P trading drive market growth, while DeFi and NFTs offer new opportunities amid risks. Cryptocurrencies hold immense potential for financial inclusion, but success hinges on coordinated regulations and improved digital literacy. As Nigeria refines its approach, it could set a precedent for cryptocurrency regulation across Africa.