Crypto in Nigeria

Nigeria’s crypto regulatory framework remains fragmented and restrictive. The Central Bank of Nigeria (CBN) issued a circular on February 5, 2021, prohibiting banks from facilitating crypto transactions, citing money laundering and terrorism financing risks. This ban was partially reversed on December 22, 2023, when the CBN lifted the prohibition on bank accounts for crypto exchanges, requiring compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines under the Money Laundering (Prevention and Prohibition) Act 2022. The Securities and Exchange Commission (SEC) Nigeria introduced the “Rules on Digital Assets Issuance, Offering, and Custody” on May 11, 2022, classifying crypto assets as securities and mandating registration for virtual asset service providers (VASPs). However, enforcement remains inconsistent, with the SEC issuing a warning on June 9, 2023, against unregistered platforms like Binance, which faced a $10 billion fine in 2024 for operating without a license. The legal status is best described as “restricted,” with no outright ban but heavy regulatory oversight.

Nigeria lacks a specific crypto tax law, but the Federal Inland Revenue Service (FIRS) applies existing tax codes. Under the Companies Income Tax Act (CITA) Cap C21 LFN 2004, crypto trading profits for businesses are taxed at 30% corporate income tax. For individuals, capital gains from crypto sales fall under the Capital Gains Tax Act (CGTA) Cap C1 LFN 2004, with a 10% rate on gains exceeding NGN 10 million ($6,500) annually. The Finance Act 2023, effective January 1, 2024, introduced a 0.5% stamp duty on electronic transactions, including crypto transfers, via the Stamp Duties Act. Reporting is voluntary, but the FIRS issued a public notice on August 15, 2023, requiring VASPs to report transaction data under the Common Reporting Standard (CRS) framework. No tax-free threshold exists for crypto, and non-compliance risks penalties of 10% of unpaid tax plus interest at 20% per annum under the Federal Inland Revenue Service (Establishment) Act 2007.

Nigeria leads Africa in crypto adoption, with an estimated 10.3 million users as of Q1 2024, per Chainalysis’ Global Crypto Adoption Index. Peer-to-peer (P2P) trading volumes hit $56.7 billion in 2023, the highest on the continent, driven by USD access demand amid NGN volatility—the naira depreciated 40% against the USD in 2023. Institutional activity is nascent but growing: Quidax, a Nigerian exchange, secured a $3 million seed round in 2022, and Yellow Card processed $1.2 billion in transactions in 2023. Use cases center on remittances—$20 billion flowed in via crypto in 2023—and savings, with 35% of users citing inflation hedging as primary motivation (Kucoin survey, 2023). The eNaira, launched October 25, 2021, has 13 million wallets but low daily usage (under 0.5% of transactions), per CBN data. Youth (18-35) drive 60% of activity, leveraging platforms like Binance P2P and Paxful, which saw 2.1 million Nigerian users in 2023.