Crypto in Nigeria

Nigeria's crypto regulatory landscape is defined by a patchwork of restrictive measures and evolving oversight. The Central Bank of Nigeria (CBN) issued a circular on February 5, 2021, prohibiting banks and financial institutions from facilitating cryptocurrency transactions, citing money laundering and terrorism financing risks. This directive remains in force, effectively excluding crypto from the formal banking system. However, the CBN has not criminalized individual ownership or peer-to-peer trading. In May 2022, the Securities and Exchange Commission (SEC) Nigeria released its 'Rules on Digital Assets Issuance, Offering Platforms, Exchange and Custody' under the Investments and Securities Act 2007, establishing a regulatory framework for digital asset exchanges and token offerings. The SEC requires exchanges to register and meet capital requirements. Despite these rules, enforcement has been limited, and the CBN's banking ban creates a dual regulatory environment where P2P trading thrives outside formal oversight. In 2023, the CBN reiterated its stance, but no new legislation has been passed. The legal status remains 'restricted'—not illegal, but heavily constrained by banking restrictions and fragmented oversight.

Nigeria does not have a specific tax regime for cryptocurrencies. The Federal Inland Revenue Service (FIRS) has not issued comprehensive guidance on crypto taxation. Under the Personal Income Tax Act (PITA) and Companies Income Tax Act (CITA), gains from crypto trading could be taxed as income or capital gains, but enforcement is minimal. In 2022, the FIRS announced plans to tax crypto gains, but no formal rules followed. The Capital Gains Tax Act 2004 imposes a 10% tax on chargeable gains, but it is unclear whether crypto falls under this. For businesses accepting crypto, VAT may apply at 7.5% under the VAT Act, but compliance is low. The SEC's 2022 rules require exchanges to report transactions, potentially aiding future tax enforcement. However, with no dedicated crypto tax law, reporting thresholds and rates remain undefined. Most individuals and P2P traders operate without reporting, and the government has not prioritized crypto tax collection amid broader economic challenges.

Nigeria has the highest cryptocurrency adoption in Africa, with over 10 million users, according to a 2023 report by Chainalysis. Peer-to-peer trading volume on platforms like Paxful and Binance P2P surged after the 2021 banking ban, reaching over $400 million monthly at its peak in 2022. The demand is driven by a youthful population (median age 18) seeking USD access and inflation hedging amid the naira's depreciation, which fell from 460 NGN/USD in January 2023 to over 900 NGN/USD by December 2023. Crypto is used for remittances, cross-border payments, and savings. Institutional activity is limited due to banking restrictions, but local exchanges like Quidax and Busha have registered with the SEC. The eNaira, launched in October 2021, has seen low adoption, with less than 1% of the population using it, according to CBN data. Despite regulatory hurdles, Nigeria ranks second globally in grassroots adoption, per Chainalysis' 2023 Global Crypto Adoption Index.