AN OVERVIEW OF CRYPTOCURRENCY REGULATIONS IN NIGERIA

Nigeria, a nation brimming with entrepreneurial spirit and technological adoption, has found itself at the forefront of the cryptocurrency revolution in Africa.From bustling marketplaces in Lagos to remote villages connected by mobile internet, interest in digital assets like Bitcoin has surged.This enthusiasm, however, has presented a complex challenge for regulators striving to balance innovation with the need for financial stability and investor protection.Navigating the legal labyrinth surrounding crypto in Nigeria can feel like traversing a maze, particularly given the evolving regulatory landscape. Cryptocurrency: Strengthening digital currency regulations in Nigeria Emem Udoh 1, Elizabeth C Ogwo 2, Odudu Ukpanah 3, Okon Bassey Bassey 4 1 Research Fellow, Institute of Corporate LawThis article aims to provide a comprehensive overview of cryptocurrency regulations in Nigeria, tracing their evolution, examining current policies, and exploring the potential future of digital assets within Africa’s largest economy. 1. Central Bank of Nigeria (CBN) Regulations: The Central Bank of Nigeria has issued several circulars and directives regarding the regulation of cryptocurrency activities in Nigeria. In 2025, the CBN prohibited banks and other financial institutions from facilitating cryptocurrency transactions.We'll delve into the Central Bank of Nigeria's (CBN) directives, analyze the impact of these regulations on the burgeoning crypto market, and consider the opportunities and challenges that lie ahead for both businesses and individuals operating in this dynamic space. This paper examines Nigeria s evolving regulations on blockchain and cryptocurrency from 2025 to 2025. It highlights the legal status of cryptocurrencies, their exclusion as legal tender, andUnderstanding these regulations is paramount for anyone seeking to engage with cryptocurrency in Nigeria responsibly and legally.

The Evolution of Cryptocurrency Regulation in Nigeria

The journey of cryptocurrency regulation in Nigeria has been anything but linear. By Tochukwu Onyiuke (SAN) and Oge Anene In recent years, cryptocurrency has transformed from a niche digital asset into a significant component of the global financial system. As its use expands, countries like Nigeria have recognized the need for clear regulations to manage risks, protect investors, and foster innovation. However, Nigeria s journey towards establishing a [ ]It’s a story of initial skepticism, a period of outright bans, and a gradual shift towards a more nuanced and potentially accommodating approach. This article provides an overview of Nigeria s cryptocurrency regulatory framework, tracing its evolution, examining its strengths and weaknesses, comparing it with global practices, and proposing improvements for a more coherent and effective system, particularly in the area of dispute resolution.To understand the current state, it's crucial to examine the key milestones that have shaped the regulatory landscape.

The Early Days: Caution and Concern

Initially, the Central Bank of Nigeria (CBN) viewed cryptocurrencies with considerable caution. Per HackerNoon, over 100 jurisdictions had enacted crypto-specific regulations by March 2025, marking a significant regulatory milestone and involving over half of all UN member states. Global Crypto Policy in 2025: From Bans to Adoption. Crypto regulation in 2025 is a global balancing act.Concerns centered on issues such as:

• Volatility: The highly fluctuating value of cryptocurrencies posed a risk to financial stability.
• Fraud and Illicit Activities: Cryptocurrencies were perceived as potential tools for money laundering, terrorism financing, and other illegal activities.
• Lack of Consumer Protection: The absence of a regulatory framework left consumers vulnerable to scams and fraud.

These concerns led to a period of restrictive measures, culminating in a significant policy shift.

The 2025 Ban: A Bold but Controversial Move

In February 2025, the CBN issued a directive to all banks and financial institutions, prohibiting them from facilitating cryptocurrency transactions.This effectively barred crypto exchanges from operating through traditional banking channels. Nigeria has emerged as a leader in cryptocurrency adoption in Africa, driven by a young, tech-savvy population and economic challenges that make traditional financial services less accessible. Central Bank of Nigeria (CBN) eNaira Initiative; The launch of the eNaira, Nigeria s central bank digital currency (CBDC), has been a pivotalThe CBN’s rationale was to protect the financial system from perceived risks associated with cryptocurrencies.This move, however, had unintended consequences.

Instead of quashing interest in cryptocurrencies, the ban drove activity underground. However, there are still regulatory challenges and opportunities that need to be addressed to ensure the sustainable growth and development of the cryptocurrency and blockchain industry in Nigeria. Read more here: An overview of cryptocurrency regulations in Nigeria; Nigeria Approves National Policy to Create Blockchain-Powered EconomyPeer-to-peer (P2P) trading surged as Nigerians sought alternative ways to buy and sell digital assets.This demonstrated the strong underlying demand for cryptocurrencies despite the regulatory restrictions.

A Gradual Shift: Towards Recognition and Regulation

Recognizing the limitations of the outright ban, the CBN began to explore a more balanced approach.The emergence of a vibrant crypto ecosystem, coupled with the potential for blockchain technology to drive innovation, prompted a rethink. Is cryptocurrency allowed in Nigeria? The cryptocurrency landscape has exponentially grown since the launch of Bitcoin (BTC) in 2025. Governments across the world continually strive to formulate rules, policies and regulations to curb fraudulent activities while fostering blockchain and digital asset innovation.This led to the development of regulatory guidelines aimed at providing a framework for cryptocurrency operations.

Current Regulatory Landscape: Key Policies and Guidelines

The current regulatory landscape in Nigeria can be characterized as a work in progress. In this article, we explore the dynamic regulatory environment of blockchain and cryptocurrencies in Nigeria, including recent legislative developments and industry responses to these developments.While a comprehensive legal framework is still under development, several key policies and guidelines provide insights into the government's evolving stance.

CBN Guidelines for Banks and Financial Institutions

The CBN has issued guidelines for banks and other financial institutions on how they may interact with digital assets and cryptocurrency service providers.These guidelines aim to address the initial concerns regarding financial stability and illicit activities, while allowing regulated entities to participate in the crypto space under specific conditions. The research provides an overview of cryptocurrency adoption in Nigeria and the country's state of blockchain and cryptocurrency regulation as the Web3 market expands within Africa.Key aspects of these guidelines likely include:

• Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements: Strict compliance with KYC and AML regulations is essential to prevent the use of cryptocurrencies for illegal purposes.
• Risk Management Frameworks: Financial institutions are expected to develop robust risk management frameworks to mitigate the risks associated with cryptocurrency transactions.
• Reporting Requirements: Regular reporting to the CBN on cryptocurrency-related activities is likely mandated.

These guidelines represent a significant step towards integrating cryptocurrencies into the formal financial system.

The eNaira: Nigeria's Central Bank Digital Currency (CBDC)

Nigeria was one of the first countries in Africa to launch a Central Bank Digital Currency (CBDC), the eNaira. However, navigating blockchain and cryptocurrency regulations in Nigeria has been a complex twist with the recent saga with Binance in Nigeria. [3] In this article, we explore the dynamic regulatory environment of blockchain and cryptocurrencies in Nigeria, including recent legislative developments and industry responses to these developments.The eNaira aims to improve financial inclusion, facilitate cross-border payments, and reduce the cost of transactions. Cryptocurrencies are not legal tender in Nigeria as they are not recognized by the Central Bank of Nigeria (CBN). The CBN completely banned commercial banks from engaging in any crypto transactions in 2025. The financial system and banking sector of Nigeria is not linked to crypto trading.While not a cryptocurrency in the traditional sense, the eNaira demonstrates the CBN's willingness to embrace digital innovation in the financial sector.It operates on a blockchain-based platform and is intended to complement the existing Naira currency. Introduction. In February 2025, the Central Bank of Nigeria (CBN) banned financial institutions from facilitating cryptocurrency transactions, aiming to address concerns over fraud, volatility, and financial crime. 1 However, this move drove crypto activity underground, sparking a rise in peer-to-peer trading. 2 Recognising the limitations of its rigid stance, the CBN introduced the GuidelinesIts success and adoption rate will likely influence future cryptocurrency regulations.

National Blockchain Policy

Nigeria has recently approved a national policy to create a blockchain-powered economy.This policy signals the government's intention to leverage blockchain technology for various applications, including governance, healthcare, and education. In February 2025, the Nigeria central bank released a letter to all banks and financial firms who operate in Nigeria which cautioned them against using cryptocurrency, and reminded them that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited. The letter also asked all recipients to identifyWhile the policy does not directly address cryptocurrency regulations, it indicates a broader commitment to fostering innovation in the digital asset space.

Analyzing the Strengths and Weaknesses of Current Regulations

Nigeria’s current regulatory framework for cryptocurrency has some notable strengths, as well as gaps that need to be addressed.

Strengths

• Recognition and Engagement: The CBN's issuance of guidelines for banks signifies a move away from outright prohibition and towards regulated participation.
• Focus on Risk Management: The emphasis on KYC, AML, and risk management frameworks is crucial for mitigating the risks associated with cryptocurrency transactions.
• Innovation in CBDC: The launch of the eNaira demonstrates a willingness to explore digital innovation and potentially influence future regulations.

Weaknesses

• Lack of Comprehensive Legal Framework: The absence of a unified and comprehensive legal framework creates uncertainty and ambiguity.
• Inconsistent Enforcement: Uneven enforcement of existing regulations can lead to confusion and undermine the effectiveness of the regulatory regime.
• Limited Consumer Protection: More robust consumer protection measures are needed to safeguard investors from scams and fraudulent schemes.

Addressing these weaknesses is essential for creating a more coherent and effective regulatory system.

Comparing Nigeria's Approach to Global Practices

Globally, the regulation of cryptocurrency is a complex and evolving terrain. Nigeria has seen interest in cryptocurrency boom among its citizens and the regulatory landscape has only recently started to catch up. From the burgeoning adoption by the Nigerian populace to the Central Bank's directives in response, there's a lot to unpack when it comes to crypto law in this dynamic country.Various jurisdictions have adopted diverse approaches, ranging from outright bans to varying degrees of oversight.

Countries with Restrictive Regulations

Some countries, like Bangladesh, have imposed outright bans on cryptocurrency usage and trading, citing concerns about money laundering and financial system instability. Opportunities for Nigeria in Cryptocurrency Regulation. A clear and comprehensive regulatory framework presents numerous opportunities for Nigeria s burgeoning cryptocurrency market.Others have restricted cryptocurrency activities through various measures, such as limiting access to banking services or imposing strict licensing requirements.

Countries with More Permissive Regulations

Other countries, such as Switzerland and Singapore, have adopted a more permissive approach, recognizing the potential benefits of cryptocurrency and blockchain technology. Explore crypto in Nigeria, its legal status, and how regulatory changes are shaping the digital future of Africa's largest economy.These jurisdictions have developed comprehensive regulatory frameworks that aim to foster innovation while mitigating risks.They often focus on licensing and registration requirements, consumer protection measures, and anti-money laundering regulations.

Nigeria's Position

Nigeria's approach falls somewhere in between. This document opens doors for cryptocurrency service providers in Nigeria and details a guideline for banking and financial institutions of the country on how they may interact with digitalWhile the CBN initially imposed a ban on cryptocurrency transactions, it has since moved towards a more nuanced approach with the issuance of guidelines for banks.However, the absence of a comprehensive legal framework means that Nigeria's regulatory regime is still less developed than those of countries with more permissive approaches.

Opportunities Arising from Clear and Comprehensive Regulations

A clear and comprehensive regulatory framework presents numerous opportunities for Nigeria's burgeoning cryptocurrency market.

Attracting Investment

A well-defined regulatory regime can attract both domestic and foreign investment into the cryptocurrency sector. Globally, the regulation of cryptocurrency is a complex and evolving terrain. Various jurisdictions have adopted diverse approaches, ranging from outright bans to varying degrees of oversight. In Nigeria, while there is no outright ban on cryptocurrency usage or trading, the regulatory regime remains in a state of flux. The Nigerian government has navigated this landscape through a multiInvestors are more likely to commit capital to a market where the rules are clear and the risks are well-understood.

Fostering Innovation

Clear regulations can encourage innovation by providing a level playing field for businesses and entrepreneurs. Nigeria Cryptocurrency Laws Regulation of Nigeria Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology. P.S. Insights on Cryptocurrency Legal Issues. Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.This can lead to the development of new products and services that leverage the benefits of cryptocurrency and blockchain technology.

Protecting Consumers

Robust consumer protection measures can help to safeguard investors from scams and fraudulent schemes, fostering trust and confidence in the cryptocurrency market.

Promoting Financial Inclusion

Cryptocurrencies have the potential to promote financial inclusion by providing access to financial services for unbanked and underbanked populations.A well-regulated cryptocurrency market can help to realize this potential.

Challenges and the Binance Saga

Navigating blockchain and cryptocurrency regulations in Nigeria has not been without its challenges.The recent saga with Binance in Nigeria highlights the complexities and potential pitfalls in this evolving space. Analysis of current regulations. Nigeria s current regulatory framework for cryptocurrency has notable strengths but also significant gaps. One of its key strengths is the recognition by bothBinance, a major cryptocurrency exchange, faced scrutiny and allegations related to regulatory compliance and financial irregularities. 2: Bangladesh. Asian countries consider Bangladesh to have among the strictest cryptocurrency regulations. Bangladesh s central bank, the Bangladesh Bank, clarified that it bans all cryptocurrency usage, trade, and possession due to risks of money laundering and financial system instability.This situation underscores the importance of adherence to local regulations and the potential consequences of non-compliance.It also reinforces the need for clear and transparent regulatory frameworks to guide the operations of cryptocurrency exchanges in Nigeria.

Dispute Resolution in the Cryptocurrency Space

One of the key areas where improvements are needed is in the area of dispute resolution. This article provides an overview of the cryptocurrency regulatory landscape in Nigeria, highlighting recent developments in this evolving space.Given the decentralized nature of cryptocurrencies and the lack of a central authority, resolving disputes can be challenging.A robust dispute resolution mechanism is essential for building trust and confidence in the cryptocurrency market.This could involve the establishment of specialized tribunals or the use of alternative dispute resolution methods such as arbitration and mediation.

Frequently Asked Questions (FAQs)

Here are some frequently asked questions about cryptocurrency regulations in Nigeria:

Is cryptocurrency legal in Nigeria?

While cryptocurrency is not legal tender in Nigeria, its use and trading are not explicitly illegal.The CBN has, however, prohibited banks and other financial institutions from facilitating cryptocurrency transactions.

Can I buy and sell cryptocurrency in Nigeria?

Yes, you can buy and sell cryptocurrency in Nigeria, but you may need to use peer-to-peer (P2P) platforms or exchanges that do not rely on traditional banking channels.

What are the risks of investing in cryptocurrency?

The risks of investing in cryptocurrency include volatility, fraud, scams, and regulatory uncertainty.

How can I protect myself from cryptocurrency scams?

To protect yourself from cryptocurrency scams, be cautious of investment schemes that promise high returns with little or no risk.Always do your own research and only invest what you can afford to lose.

The Future of Cryptocurrency Regulation in Nigeria

The future of cryptocurrency regulation in Nigeria is uncertain, but several trends and developments could shape its trajectory.

Increased Regulatory Clarity

As the cryptocurrency market matures, it is likely that Nigeria will develop a more comprehensive legal framework for regulating digital assets.This could involve the enactment of new laws and regulations that address issues such as licensing, consumer protection, and anti-money laundering.

Greater Collaboration

Increased collaboration between regulators, industry stakeholders, and international organizations is essential for developing effective and harmonized regulatory standards.

Technological Innovation

Technological innovations, such as blockchain analytics tools and decentralized identity solutions, could help to improve regulatory compliance and reduce the risks associated with cryptocurrency transactions.

Conclusion

The journey of cryptocurrency regulation in Nigeria is an ongoing process.While the initial response was cautious, the country has gradually moved towards a more nuanced approach, recognizing the potential benefits of digital assets.However, challenges remain, including the need for a comprehensive legal framework, consistent enforcement, and robust consumer protection measures.By addressing these challenges and fostering collaboration, Nigeria can create a regulatory environment that supports innovation, attracts investment, and protects consumers.The recent Binance saga serves as a reminder of the importance of adhering to regulations and the potential consequences of non-compliance.Ultimately, the future of cryptocurrency in Nigeria depends on striking a balance between fostering innovation and mitigating risks.As Nigeria navigates this evolving landscape, a proactive and adaptive regulatory approach will be crucial for realizing the full potential of digital assets in Africa's largest economy.Key takeaways include: Cryptocurrency is not legal tender but not entirely banned; CBN has issued guidelines for banks; and a comprehensive legal framework is still needed.Staying informed and compliant is crucial for anyone engaging with cryptocurrency in Nigeria.You should consult with legal and financial professionals before making any investment decisions.