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Nigeria

Retail_Trading_Status

Allowed-Regulated Unknown
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2025-06-26 13:04
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Executive Summary

Nigeria permits retail cryptocurrency trading under a regulated framework. The Securities and Exchange Commission (SEC Nigeria) oversees the crypto space, recognizing cryptocurrencies as securities under the Investments and Securities Act (ISA) 2025. Key requirements include licensing for Virtual Asset Service Providers (VASPs) and strict KYC/AML compliance. While the Central Bank of Nigeria (CBN) initially restricted banks from crypto transactions in 2021, it has since loosened these restrictions, allowing licensed VASPs to operate bank accounts, although P2P platforms face potential restrictions.

Key Pillars

The primary regulator is the Securities and Exchange Commission (SEC) of Nigeria, which oversees the issuance, trading, and custody of digital assets. The core compliance requirements include stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) measures, enforced through identity verification, transaction monitoring, and reporting of suspicious activities. Licensing is mandatory for Virtual Asset Service Providers (VASPs), requiring registration with the SEC Nigeria and adherence to minimum paid-up capital and fidelity bond requirements.

Landmark Laws

  • CBN Circular (February 2021): Prohibited deposit money banks, non-bank financial institutions, and other financial institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges.
  • **SEC

Considerations

Cryptocurrencies are classified as securities under the ISA 2025. Gains from digital asset disposal are subject to a 10% Capital Gains Tax if exceeding ₦10 million, as per the Finance Act 2023. Regulators, like the SEC, continue to warn about the risks of cryptocurrency investments, including market volatility and fraud. There are concerns about potential restrictions on Nigerian Naira (NGN) pairs on P2P platforms to curb foreign exchange manipulation.

Notes

The Nigerian crypto regulatory landscape is still evolving. Future plans include specific regulations for stablecoins and potential integration of the eNaira (Nigeria's CBDC) with licensed VASPs. The broad classification of all cryptocurrencies as securities brings complexities, especially for utility tokens. The implementation of the ISA 2025 and SEC rules will be crucial. The CBN directive mandates real-time alerts for high-risk transactions, including crypto-linked activity.

Detailed Explanation

Nigeria's approach to retail cryptocurrency trading has transitioned from restrictive measures to a regulated environment. As of early 2025, individuals are legally permitted to buy, sell, and hold cryptocurrencies, subject to specific regulations, marking a shift from the Central Bank of Nigeria's (CBN) 2021 directive, which restricted banks from facilitating crypto transactions. Now, cryptocurrencies are recognized as securities and regulated by the Securities and Exchange Commission (SEC Nigeria). In February 2021, the CBN issued a circular prohibiting banks and other financial institutions from dealing in or facilitating payments for cryptocurrency exchanges due to concerns about money laundering and market volatility. This did not ban individuals from trading but limited their access to the formal banking system, driving trades to peer-to-peer (P2P) platforms. Recognizing the increasing adoption, regulators developed a comprehensive framework. Key milestones include the SEC releasing "Rules on Issuance, Offering Platform and Custody of Digital Assets" in May 2022, and the CBN issuing "Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers (VASPs)" in December 2023, effectively lifting the 2021 ban and allowing licensed VASPs to open bank accounts.

In early 2025, the Investments and Securities Act (ISA) 2025 was signed into law, officially recognizing digital assets, including cryptocurrencies, as securities and granting the SEC statutory authority over their issuance, trading, and custody. Under the ISA 2025 and SEC regulations, retail cryptocurrency trading is permitted but subject to investor protection, market integrity, and financial crime prevention measures. Key aspects include the licensing of VASPs, which must register with and obtain a license from the SEC Nigeria, with minimum paid-up capital requirements (e.g., ₦500 million) and fidelity bond requirements. Strict Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements are imposed on licensed platforms, including identity verification, transaction monitoring, and reporting of suspicious activities to the Nigerian Financial Intelligence Unit (NFIU). The CBN has mandated real-time alerts for high-risk transactions, including crypto-linked activity, for all financial institutions. Regulations include provisions for prospectus-style disclosures, audited reserves for custodians, segregation of client assets, and potential retail investment caps on high-risk tokens. The SEC has powers to suspend listings and freeze wallets in cases of suspected fraud.

Gains from the disposal of digital assets, including cryptocurrencies, are subject to a 10% Capital Gains Tax if the gains exceed ₦10 million, as stipulated by the Finance Act 2023. While P2P trading is allowed, there are indications that Nigerian Naira (NGN) pairs on these platforms may face restrictions to curb foreign exchange manipulation and protect the local currency. Regulators like the SEC continue to issue warnings about the risks associated with cryptocurrency investments, advising investors to only deal with SEC-registered and licensed platforms. The Nigerian crypto regulatory landscape is still relatively new and evolving. The implementation of the ISA 2025 and the SEC's rules will be crucial. There are ongoing discussions and expected developments, such as specific regulations for stablecoins and potential integration of the eNaira (Nigeria's CBDC) with licensed VASPs. The classification of all cryptocurrencies as securities also brings complexities, particularly for utility tokens or those with different functionalities, and how these will be distinctly treated under the broad "securities" definition remains an area to watch.

In summary, Nigeria has moved from a restrictive stance to a regulated environment for retail cryptocurrency trading. Individuals can legally participate, but they must use licensed platforms that adhere to comprehensive regulatory requirements, including robust KYC/AML measures. As stated by Maliweb.net, citing the ISA 2025 and SEC/CBN actions, "Yes, cryptocurrencies are legal and regulated as securities under the new Investments and Securities Act (ISA) 2025." TechCabal notes that President Bola Tinubu signed the ISA 2025, and "digital assets are now recognised as securities," defining a digital asset as “a digital token that represents assets such as a debt or equity claim on the issuer” and includes any asset issued on a blockchain. Dentons ACAS-Law observes that the ISA 2025 marks "a pivotal moment in financial evolution in Nigeria" and reflects "a broader shift in regulatory philosophy, from reactive prohibition to proactive regulation and oversight."

Summary Points

Okay, here's the regulatory analysis report converted into a clear, well-structured bullet point format:

Nigeria: Retail Cryptocurrency Trading Regulatory Status (June 2025)

Overall Status: Allowed-Regulated

1. Key Regulatory Bodies and Their Roles:

  • Securities and Exchange Commission (SEC Nigeria):
    • Primary regulatory body overseeing cryptocurrency and other digital assets.
    • Responsible for licensing Virtual Asset Service Providers (VASPs).
    • Enforces regulations related to issuance, trading, and custody of digital assets.
    • Has powers to suspend listings and freeze wallets in cases of suspected fraud.
  • Central Bank of Nigeria (CBN):
    • Regulates banking operations related to VASPs.
    • Issues guidelines on bank accounts for VASPs.
    • Mandates real-time alerts for high-risk transactions, including crypto-linked activity, for all financial institutions.
  • Nigerian Financial Intelligence Unit (NFIU):
    • Receives reports of suspicious activities from VASPs and other financial institutions.

2. Important Legislation and Regulations:

  • Investments and Securities Act (ISA) 2025:
    • Landmark legislation officially recognizing digital assets, including cryptocurrencies, as securities.
    • Grants the SEC clear statutory authority to oversee the issuance, trading, and custody of digital assets.
    • Defines a digital asset as “a digital token that represents assets such as a debt or equity claim on the issuer” and includes any asset issued on a blockchain.
  • SEC "Rules on Issuance, Offering Platform and Custody of Digital Assets" (May 2022):
    • Establishes the framework for the registration and operation of Virtual Asset Service Providers (VASPs).
  • CBN "Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers (VASPs)" (December 2023):
    • Allows licensed VASPs to open bank accounts, reversing the 2021 ban on banks servicing the crypto sector.
  • Finance Act 2023:
    • Stipulates a 10% Capital Gains Tax on gains from the disposal of digital assets exceeding ₦10 million.

3. Requirements for Compliance (VASPs):

  • Licensing:
    • VASPs (exchanges, custodians, etc.) must register with and obtain a license from the SEC Nigeria.
    • Significant minimum paid-up capital requirements (e.g., ₦500 million for VASPs).
    • Fidelity bond requirements.
  • KYC/AML:
    • Strict Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
    • Identity verification of customers.
    • Transaction monitoring.
    • Reporting of suspicious activities to the NFIU.
  • Consumer Protection:
    • Prospectus-style disclosures.
    • Audited reserves for custodians.
    • Segregation of client assets.
    • Potential retail investment caps on high-risk tokens.
  • Taxation:
    • Comply with Capital Gains Tax regulations on digital asset disposals.

4. Notable Restrictions or Limitations:

  • P2P Trading:
    • While allowed, Nigerian Naira (NGN) pairs on P2P platforms may face restrictions to curb foreign exchange manipulation.
  • General Warnings:
    • Regulators continue to issue warnings about the risks associated with cryptocurrency investments (volatility, fraud).
    • Investors are advised to only deal with SEC-registered and licensed platforms.
  • Classification Complexities:
    • The classification of all cryptocurrencies as securities brings complexities, particularly for utility tokens or those with different functionalities.

5. Recent Developments or Changes:

  • ISA 2025 Implementation:
    • The implementation of the ISA 2025 and the SEC's rules is ongoing and crucial.
  • Potential Future Regulations:
    • Ongoing discussions and expected developments, such as specific regulations for stablecoins.
    • Potential integration of the eNaira (Nigeria's CBDC) with licensed VASPs.
  • Real-Time AML Monitoring:
    • CBN mandates real-time alerts for high-risk transactions, including crypto-linked activity, for all financial institutions.

6. Historical Context and Evolution:

  • February 2021: CBN prohibited banks from facilitating crypto transactions.
  • May 2022: SEC released "Rules on Issuance, Offering Platform and Custody of Digital Assets."
  • December 2023: CBN issued "Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers (VASPs)."
  • Early 2025: ISA 2025 signed into law, officially recognizing digital assets as securities.

Full Analysis Report

Retail_Trading_Status: Nigeria

Report Date: 2025-06-26

Topic: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Current Status:

Allowed-Regulated

2. Detailed Narrative Explanation:

Nigeria's stance on retail cryptocurrency trading has evolved significantly from initial restrictions to a more structured regulatory approach. As of early 2025, individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies, but this activity is now subject to specific regulations. This marks a shift from the Central Bank of Nigeria's (CBN) 2021 directive that restricted banks from facilitating crypto transactions to a framework where cryptocurrencies are recognized as securities and regulated by the Securities and Exchange Commission (SEC Nigeria).

Historical Context and Evolution:

Initially, in February 2021, the CBN issued a circular prohibiting deposit money banks, non-bank financial institutions, and other financial institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges. This was primarily due to concerns around money laundering, terrorism financing, and the volatility of the crypto market. However, this directive did not outright ban individuals from trading or holding cryptocurrencies but rather cut off their access to the formal banking system for such transactions, pushing a significant volume of trades to peer-to-peer (P2P) platforms.

Recognizing the growing adoption and the limitations of the restrictive approach, Nigerian regulators began to develop a more comprehensive framework. Key milestones in this evolution include:

  • May 2022: The Securities and Exchange Commission (SEC) of Nigeria released "Rules on Issuance, Offering Platform and Custody of Digital Assets," signaling its intent to regulate the crypto space.
  • December 2023: The CBN issued "Guidelines on the Operations of Bank Accounts for Virtual Assets Service Providers (VASPs)," effectively lifting the 2021 ban on banks servicing the crypto sector and allowing VASPs to open bank accounts, provided they are licensed by the SEC.
  • Early 2025: The Investments and Securities Act (ISA) 2025 was signed into law. This is a landmark piece of legislation that officially recognizes digital assets, including cryptocurrencies, as securities. This grants the SEC clear statutory authority to oversee the issuance, trading, and custody of these assets.

Current Regulatory Framework:

Under the ISA 2025 and supporting SEC regulations, retail cryptocurrency trading is permitted but subject to a regulatory regime focused on investor protection, market integrity, and financial crime prevention. Key aspects of this framework include:

  • Licensing of VASPs: Entities operating as cryptocurrency exchanges, custodians, or offering other digital asset services must register with and obtain a license from the SEC Nigeria to operate legally. There are significant minimum paid-up capital requirements (e.g., ₦500 million for VASPs) and fidelity bond requirements.
  • KYC/AML Requirements: Strict Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements are imposed on licensed platforms. This includes identity verification of customers, transaction monitoring, and reporting of suspicious activities to relevant authorities like the Nigerian Financial Intelligence Unit (NFIU). The CBN has also mandated real-time alerts for high-risk transactions, including crypto-linked activity, for all financial institutions.
  • Consumer Protection: Regulations include provisions for prospectus-style disclosures, audited reserves for custodians, segregation of client assets, and potential retail investment caps on high-risk tokens. The SEC has powers to suspend listings and freeze wallets in cases of suspected fraud.
  • Taxation: Gains from the disposal of digital assets, including cryptocurrencies, are subject to a 10% Capital Gains Tax if the gains exceed ₦10 million, as stipulated by the Finance Act 2023.
  • P2P Trading: While P2P trading is allowed, there are indications that Nigerian Naira (NGN) pairs on these platforms may face restrictions to curb foreign exchange manipulation and protect the local currency.

Official Statements and Warnings:

While the regulatory framework is now more defined, regulators like the SEC continue to issue warnings to the public about the risks associated with cryptocurrency investments, including market volatility and the potential for fraud. Investors are advised to only deal with SEC-registered and licensed platforms.

Nuance and Complexity:

The Nigerian crypto regulatory landscape is still relatively new and evolving. The implementation of the ISA 2025 and the SEC's rules will be crucial. There are ongoing discussions and expected developments, such as specific regulations for stablecoins and potential integration of the eNaira (Nigeria's CBDC) with licensed VASPs. The classification of all cryptocurrencies as securities also brings complexities, particularly for utility tokens or those with different functionalities, and how these will be distinctly treated under the broad "securities" definition remains an area to watch.

In summary, Nigeria has moved from a restrictive stance to a regulated environment for retail cryptocurrency trading. Individuals can legally participate, but they must use licensed platforms that adhere to comprehensive regulatory requirements, including robust KYC/AML measures.

3. Specific, Relevant Text Excerpts:

  • Maliweb.net (citing ISA 2025 and SEC/CBN actions): "Yes, cryptocurrencies are legal and regulated as securities under the new Investments and Securities Act (ISA) 2025." "The Central Bank of Nigeria (CBN) has loosened its 2021 banking ban, and the Securities and Exchange Commission (SEC) has issued detailed rules for virtual-asset service providers (VASPs). Most importantly, the Investments and Securities Act (ISA) 2025 now officially treats cryptocurrencies as mainstream securities." "The CBN now allows licensed VASPs to operate designated accounts—but with strict KYC/AML enforcement."
  • TechCabal (on ISA 2025): "On March 25, 2025, Nigeria took a decisive step toward regulating its fast-growing cryptocurrency sector. President Bola Tinubu signed the long-awaited Investments and Securities Act (2025)...digital assets are now recognised as securities." "Under the ISA 2025, a digital asset is “a digital token that represents assets such as a debt or equity claim on the issuer” and includes any asset issued on a blockchain. This definition captures cryptocurrencies like Bitcoin and Ether, stablecoins, security tokens, and potentially tokenised real-world assets used as investments or that hold trading value."
  • Dentons ACAS-Law (on regulatory evolution): "The recognition of virtual assets and digital assets as securities under the Investment and Securities Act (ISA) 2025 marks a pivotal moment in financial evolution in Nigeria." "The provisions of the Digital Assets Rules and ISA 2025 reflects a broader shift in regulatory philosophy, from reactive prohibition to proactive regulation and oversight."
  • Businessday NG (on ISA 2024/2025 and SEC's role): "Nigeria's new capital market laws now officially classify cryptocurrencies and other virtual assets as securities for the first time...The Act explicitly recognises virtual/digital assets and investment contracts as securities and brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs) and Digital Asset Exchanges under the SEC's regulatory purview." (Note: Some sources refer to it as ISA 2024, while others consistently use ISA 2025. The context indicates the same recent legislation.)
  • Pavestones Legal (on SEC licensing and CBN guidelines): "At present, the SEC is the primary regulatory body overseeing cryptocurrency and other digital assets in Nigeria. The Guidelines followed the SEC's release of Rules on the issuance and custody of Digital Assets in May 2022. These Rules established the framework for the registration and operation of Virtual Asset Service Providers (VASPs) which include crypto companies." "In December 2023, the CBN partially reversed its stance by issuing the Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (the “Guidelines”).* These Guidelines permitted cryptocurrency trading companies—such as crypto exchanges, crypto wallets, and digital currency creators—to open bank accounts, provided they met specific conditions, including obtaining a license from the Securities and Exchange Commission (SEC)."
  • Smile ID (on AML Compliance): "On May 20, 2025, the Central Bank of Nigeria (CBN) issued a circular that signals a sharp pivot toward real-time, tech-driven compliance. The directive...mandates all financial institutions to implement real-time alerts for high-risk transactions. These include cross-border transfers, large cash deposits, crypto-linked activity, and any transaction previously flagged under AML guidelines."
  • Zabira Blog (on KYC/AML for traders): "Stronger KYC & AML Compliance – Traders and investors must go through enhanced identity verification processes before transacting on any crypto trading platform in Nigeria."

4. Direct, Accessible URL Links to Sources:

  1. Maliweb.net - Crypto Regulations in Nigeria 2025: What You Need to Know: https://www.maliweb.net/news/check-crypto-regulations-in-nigeria-2025-what-you-need-to-know-2980073.html (Note: While the primary source for ISA 2025 would be official government gazettes, this article provides a comprehensive summary of its implications and references to earlier SEC/CBN circulars.)
  2. TechCabal - What the Investments and Securities Act means for Nigeria’s crypto ecosystem: https://techcabal.com/2025/05/09/what-the-investments-and-securities-act-means-for-nigerias-crypto-ecosystem/
  3. Dentons ACAS-Law - Regulation, evolution, and the future of virtual assets in Nigeria: https://www.dentons.com/en/insights/alerts/2025/may/2/regulation-evolution-and-the-future-of-virtual-assets-in-nigeria
  4. Businessday NG - Nigeria recognises cryptocurrencies as securities in landmark legal shift: https://businessday.ng/markets/article/nigeria-recognises-cryptocurrencies-as-securities-in-landmark-legal-shift/
  5. Pavestones Legal - SETTING UP A CRYPTOCURRENCY BUSINESS IN NIGERIA: https://pavestoneslegal.com/setting-up-a-cryptocurrency-business-in-nigeria/
  6. Smile ID - CBN Tightens AML Compliance: What the New Real-Time Monitoring Circular Means for Financial Institutions: https://usesmileid.com/blog/cbn-tightens-aml-compliance-what-the-new-real-time-monitoring-circular-means-for-financial-institutions
  7. Zabira Blog - Nigeria Crypto Regulation 2025 – Key Updates for Crypto Traders: https://zabira.com/blog/nigeria-crypto-regulation-2025-key-updates-for-crypto-traders/
  8. Mariblock - Nigeria's president signs bill recognizing digital assets into law: https://mariblock.com/news/nigerias-president-signs-bill-recognizing-digital-assets-into-law/
  9. Tope Adebayo LP - How the ISA 2025 Reshapes the Nigerian Virtual Asset Market: https://topeadebayolp.com/how-the-isa-2025-reshapes-the-nigerian-virtual-asset-market/
  10. Creditcoin - Nigeria's Crypto Laws & Regulation in 2024: https://creditcoin.org/blog/nigerias-crypto-laws-regulation-in-2024/ (Provides good historical context leading up to the 2025 changes)
  11. Remitano - Cryptocurrency Trading in Nigeria ― Profitable or Scam?: https://remitano.com/forum/ng/post/11830-cryptocurrency-trading-in-nigeria-profitable-or-scam (Offers a general overview and user perspective)
  12. Smile ID - Ultimate Guide to AML Compliance for Crypto in 2025: https://usesmileid.com/blog/ultimate-guide-to-aml-compliance-for-crypto-in-2025 (General AML but relevant to VASP obligations)
  13. Businessday NG - Overview of the SEC’s amended digital assets rules: https://businessday.ng/legal-business/article/overview-of-the-secs-amended-digital-assets-rules/
  14. Benjamindada.com - Nigerian crypto companies should be cautious as SEC recognises crypto as securities: https://www.benjamindada.com/sec-recognises-crypto-as-securities-nigeria/
  15. Sumsub - Breaking News, Explained: Central Bank of Nigeria Mandates Real-Time AML Transaction Alerts: https://sumsub.com/blog/central-bank-of-nigeria-mandates-real-time-aml-transaction-alerts/

(Disclaimer: As an AI, I do not have access to real-time updates beyond my last training data. The information provided is based on the search results up to June 2025. For definitive legal and financial advice, consult with qualified professionals in Nigeria.)

Web Sources (16)

Sources discovered via web search grounding

Search queries used (6)
  • current status of retail cryptocurrency trading in Nigeria 2025
  • Central Bank of Nigeria cryptocurrency regulations 2025
  • Nigerian Securities and Exchange Commission cryptocurrency guidelines 2025
  • retail crypto trading laws Nigeria
  • KYC/AML requirements for crypto platforms in Nigeria 2025
  • official statements on cryptocurrency in Nigeria 2025
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