Crypto in Nigeria

Nigeria maintains a bifurcated regulatory stance. The Central Bank of Nigeria (CBN) issued a circular on February 5, 2021, directing all banks to close accounts transacting in cryptocurrencies, citing risks to financial stability and money laundering. This effectively banned bank-crypto interactions. However, the Securities and Exchange Commission (SEC Nigeria) released its 'Rules on Digital Assets' on May 11, 2022, classifying crypto assets as securities under the Investments and Securities Act 2007. The SEC requires registration for digital asset exchanges and token issuers, with a minimum paid-up capital of NGN 500 million ($1.1 million) for exchanges. In December 2023, the CBN partially reversed its ban via a circular allowing banks to process crypto transactions for licensed exchanges, but only through designated accounts. The regulatory framework remains fragmented: the CBN controls monetary policy, while the SEC oversees securities. No comprehensive crypto-specific law exists, leaving enforcement inconsistent. The eNaira, launched October 25, 2021, is a CBDC but has low adoption—only 0.5% of the population uses it per a 2023 survey—and does not replace decentralized crypto.

Nigeria has no specific crypto tax law. The Finance Act 2023 did not address digital assets, leaving crypto under general income tax rules. The Federal Inland Revenue Service (FIRS) treats crypto gains as 'income from other sources' under the Companies Income Tax Act (CITA) for businesses, taxed at 30% for large firms, or as capital gains under the Capital Gains Tax Act (CGTA) for individuals, taxed at 10% on disposals. However, enforcement is near-zero due to lack of reporting infrastructure. The FIRS issued a public notice on August 8, 2023, requiring crypto exchanges to report user transactions, but no compliance mechanism exists. For individuals, crypto-to-fiat conversions are taxable if exceeding NGN 10 million ($22,000) annually, per informal FIRS guidance. No VAT applies to crypto trades. The 2024 proposed tax reform bill, still pending, suggests a 0.5% levy on digital asset transfers, but it has not passed. This ambiguity deters institutional participation and leaves retail traders in a gray zone.

Nigeria leads Africa in peer-to-peer (P2P) crypto trading volume, with $59 billion in on-chain value received between July 2022 and June 2023, per Chainalysis. Over 10 million Nigerians own crypto, driven by USD demand due to NGN depreciation—the naira lost 40% against the USD in 2023 alone. Use cases are pragmatic: remittances (over $20 billion annually, with crypto capturing ~5%), savings in stablecoins (USDT, USDC), and cross-border trade. Institutional activity is nascent but growing: Yellow Card, a licensed exchange, processed $1.5 billion in transactions in 2023, while Busha and Quidax have SEC licenses. The youth demographic (median age 18) drives adoption, with 33% of 18-34 year-olds owning crypto per a 2023 KuCoin survey. However, bank restrictions push 70% of trades to P2P platforms like Binance P2P and Paxful. The eNaira has not dented adoption, as users prefer decentralized assets for hedging against inflation (29% annual rate in 2023).