Crypto in Nigeria

Nigeria's crypto regulatory framework remains restrictive but fragmented. The Central Bank of Nigeria (CBN) issued a circular on February 5, 2021, prohibiting banks and financial institutions from servicing crypto exchanges, citing money laundering and terrorism financing risks. That directive still stands, though the CBN in December 2023 lifted a ban on banks facilitating crypto transactions for licensed entities under the Securities and Exchange Commission (SEC) Nigeria's digital asset framework. The SEC published its Rules on Digital Assets Offering Platforms, Custodians, and Exchanges in May 2022, classifying digital tokens as securities under the Investments and Securities Act 2025 (which replaced the 2007 Act). The SEC's Accelerated Regulatory Incubation Programme (ARIP) has admitted firms like Busha and Quidax to test compliance. However, no comprehensive crypto law has been enacted; the sector operates under a patchwork of CBN circulars and SEC guidelines. The eNaira, launched in October 2021, is the only government-backed digital currency, but its adoption has been minimal. Legal uncertainty persists, with the CBN and SEC occasionally issuing conflicting signals.

Nigeria has no specific crypto tax legislation. The Federal Inland Revenue Service (FIRS) treats gains from crypto trading as capital gains, subject to the Capital Gains Tax Act, which imposes a 10% rate on chargeable gains. However, enforcement is weak due to the pseudonymous nature of crypto and the lack of reporting requirements for exchanges. The Finance Act 2023 introduced a 10% withholding tax on digital asset transactions, but implementation has been delayed. The Personal Income Tax Act (PITA) may apply to crypto earnings as 'other income' at progressive rates up to 24%, but the FIRS has not issued clear guidance. The SEC's digital asset rules require exchanges to conduct KYC and report suspicious transactions, but tax reporting is not mandated. In practice, most crypto users do not report gains, and the tax authority lacks the infrastructure to track P2P trades. The 2025 Tax Act, effective January 2026, includes provisions for taxing digital assets, but details remain sparse.

Nigeria has Africa's largest crypto market, with over 10 million users, according to Chainalysis. P2P trading volumes on platforms like Paxful and Binance peaked at $400 million monthly in 2021, but Binance's exit in 2024 following regulatory pressure shifted activity to local exchanges like Quidax and Busha. The primary use case is accessing USD to hedge against naira volatility; the currency lost over 70% of its value against the dollar since 2023. Youth-driven adoption is high, with 35% of Nigerians aged 18-35 owning crypto, per a 2024 Statista survey. Institutional activity is limited but growing; the SEC's ARIP has licensed two digital asset exchanges and three custodians as of 2025. Remittances via crypto reached $2.5 billion in 2024, according to the World Bank, as diaspora Nigerians use stablecoins to bypass high transfer fees. However, the CBN's restrictions on bank accounts for crypto firms continue to hamper liquidity.