Nigeria is taking a front-door approach to regulating virtual assets.

For years, the country’s crypto economy operated through a mix of offshore exchanges, peer-to-peer (P2P) networks, informal payment rails, and loosely supervised infrastructure. 

Regulators are now trying to pull that activity into the formal financial system without repeating the blunt restrictions that characterised earlier attempts to control the sector.

Nigeria is prioritising two things in its regulatory approach: taxation and transaction monitoring. This aligns, in part, with the global Crypto-Asset Reporting Framework (CARF), to which Nigeria has committed to implementing from 2028.

These capabilities could help the government monitor crypto-related activity, reduce risks associated with illicit financial flows and tax non-compliance, and bring more of the virtual-asset economy into the formal regulatory system. But creating a broad regulatory architecture also raises the risk of overlapping oversight if the responsibilities of individual agencies are not clearly defined. 

The monitoring component is gaining more teeth. In its Payments System Vision 2028 (PSV 2028) released on June 1, the Central Bank of Nigeria (CBN) proposed allowing the bank to operate observer nodes in blockchain infrastructure supporting approved stablecoins. 

The proposal fits into the country’s broader direction of travel: Nigeria is not trying to eliminate crypto activity; it is trying to increase its visibility and bring significant virtual-asset activity touching the Nigerian economy within a framework of reporting, supervision and taxation. 

A regulatory consortium, not a single regulator

Ultimately, regulating virtual assets requires coordination between regulators because digital assets can straddle different parts of the financial system. 

In traditional finance, payments-focused fintechs can operate under CBN oversight by providing technology and working with licenced financial institutions.  

Once those operations shift into investment activities involving customers’ money, however, they can cross into securities territory. Partnerships and owning or acquiring subsidiaries can become part of the regulatory structure. 

PiggyVest, the Nigerian savings and investment platform, warehouses user funds through PV Capital Limited, a subsidiary registered with the country’s Securities and Exchange Commission (SEC) as a fund/portfolio manager. 

The SEC’s revised capital market guidelines in March raised the minimum capital requirement for fund/portfolio managers from ₦500 million ($368,000) to ₦2 billion ($1.5 million).

The SEC defines capital base as shareholders’ funds net of accumulated losses, while qualifying capital must be fully paid-up, freely available, unencumbered, and capable of absorbing losses on a going-concern basis. 

Virtual assets complicate this distinction. A virtual asset service provider (VASP) facilitating the buying and selling of digital assets may also hold customer assets, manage liquidity, match orders, and create exposures that resemble brokerage, custody, or investment activities. 

Digital asset exchanges and custodians therefore fall within a more consequential regulatory category under the SEC’s revised capital requirements. The SEC now sets minimum capital requirements of ₦2 billion ($1.5 million) for digital asset exchanges and custodians.

Ancillary Virtual Asset Service Providers (AVASPs), which provide technical, operational, or infrastructure support services that power more consequential exchange and digital investment service platforms, face a lower ₦300 million ($220,600). 

The role of centralised exchanges and custodians in securing assets and facilitating token-to-fiat, fiat-to-token, and token transfers—which now dominate Nigeria’s virtual asset market—also makes them relevant to foreign exchange (FX) stability, giving them significance beyond the narrow trading of digital assets.

The SEC’s regulatory incubation programmes offer a window into how the regulator is approaching the market. About 14 companies have been admitted into the Accelerated Regulatory Incubation Programme (ARIP). But admission to ARIP is not the same as receiving a final operating licence; the SEC says approval-in-principle remains conditional on continued compliance.

Exchanges, such as Quidax, Busha, KuCoin—which registered in Nigeria in August 2024—fintech GIGX Technologies, stablecoin issuer Wrapped CBDC (which issues naira-backed cNGN), and over-the-counter (OTC) infrastructure company KoinKoin, are all being supervised through a securities-and-investment lens.

The CBN, meanwhile, is looking at parts of the market through a payments and FX lens, which helps explain why stablecoins have become a policy focus.

Lasbery Oludimu, Vice President of Operations at Yellow Card, the emerging-market-focused stablecoin company, said at a media briefing with journalists in Lagos on August 12 that the overlap reflects how virtual assets are used in practice.

“If you look at traditional finance, the SEC is responsible for securities, the central bank is responsible for payments; but because there are [digital assets used for] payments, it’s only natural that when it comes to payments, [the CBN] should also be involved,” Oludimu said.

“What we are saying as a player is that [we] need to get a licence from the SEC, and [we] need to get into the sandbox with CBN because [the regulator] is focused on payments.”

On August 12, the CBN expanded its regulatory sandbox to virtual asset companies for the first time ever, underscoring the crucial payments and FX stability role some of these service providers play in Nigeria’s financial technology sector.

Yet, the country’s evolution, when compared to the first time a regulator formally acknowledged digital and virtual assets, has been striking, and points to regulators that have had to rework and reassess their approach.

In September 2020, the SEC released a statement.

“The position of the Commission is that virtual crypto assets are securities, unless proven otherwise. Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC is placed on the issuer or sponsor of the said assets,” the regulator said.

Six years later, regulators have discovered that Bitcoin, stablecoins, tokenised securities, and decentralised finance (DeFi) tokens do not behave the same way. The result is a shift from a single-regulator approach to a regulatory consortium involving the CBN, the SEC, the Nigeria Revenue Service (NRS), the Nigerian Financial Intelligence Unit (NFIU), and the Office of the National Security Adviser (ONSA), with each agency supervising a different layer of the ecosystem.

Nigeria’s tax-first strategy

The clearest evidence of Nigeria’s priorities is that it developed specific virtual asset tax rules before creating a licencing framework—or at least before fully licencing operators.

Should Nigeria have a tax framework before a clear or specific licencing guideline? It has been a race between all the moving parts of virtual asset regulation; taxes just happened to get there first. 

On August 3, the NRS released a tax framework for virtual assets, covering cryptocurrencies, stablecoins, and non-fungible tokens (NFTs). The move may look premature, but it is not unusual. 

Several jurisdictions, including the United States, the United Kingdom, and Hong Kong, initially relied on existing guidelines—though they focused on income and property gains—to tax virtual assets before developing clearer crypto-specific regulatory frameworks. 

Hong Kong’s revised 2020 framework later refined that approach by distinguishing between trading activity, business use of cryptocurrency, initial coin offering (ICO) proceeds, mining income, and long-term investment holdings. 

It is a useful comparison that shows governments often seek visibility into taxable crypto activity before the broader licencing architecture is fully settled. And like Nigeria, Hong Kong is increasingly prioritising digital asset reporting requirements under CARF’s framework.

But those are where the similarities end. While Nigeria’s guidelines tax the lifecycle of virtual assets—applying 1.5% stamp duty—they also extend tax obligations to retail transactions that use virtual assets.

Crypto-to-crypto payments can trigger income tax if the asset has appreciated before it is spent, while value-added tax (VAT) applies to the underlying goods or services being sold. 

Stamp duty applies to crypto-to-fiat conversions handled by a virtual asset service provider (VASP) or intermediary; a crypto-backed card, for example, that converts Bitcoin or USDT into naira before merchant settlement would generally fall within the token-to-fiat “disposal” rules, while a payment settled entirely in crypto would generally avoid the stamp-duty charge. 

Yet, the guidelines also give DeFi users some structural breathing room by treating mere token holding, transfers between personal wallets, staking lock-ups, and tokenised assets as non-taxable events where beneficial ownership does not change. The flexibility creates tension with global financial watchdogs. 

In a July report, the Financial Action Task Force (FATF) warned about the risks posed by decentralised finance (DeFi), including its use in illicit financial flows and other forms of financial crime.

By exempting activities such as wrapping tokens and receiving DeFi receipt tokens from immediate taxation, Nigeria’s tax framework could encourage investors and users to keep capital active inside decentralised protocols rather than move it back into regulated financial channels.

While the approach is highly tax-efficient, it could also push more transaction volume toward the same unhosted, peer-to-pool networks that the FATF says 132 of 142 surveyed countries struggle to identify, let alone supervise. 

Nigeria’s next challenge will be making sure these tax incentives do not end up pushing more money into parts of the crypto market that regulators struggle to monitor

Why the next phase is about supervision

If it plays its cards right, Nigeria could still become West Africa’s most important regulated digital asset market, attracting offshore exchanges, custodians, tokenisation platforms, and stablecoin infrastructure providers seeking certainty. However, on regulatory merits alone, Nigeria is not yet widely viewed as a top destination for foreign entrants. 

That view remains divided, with Norman Wooding, co-founder of SCRYPT, a Swiss-based B2B stablecoin infrastructure company that expanded to Kenya, Uganda, and Tanzania in July, noting that he is watching how clearer licencing and oversight rules evolve before treating the market as a priority expansion destination. 

The risk is equally obvious. A consortium involving the CBN, SEC, NRS, NFIU, and ONSA creates enormous supervisory reach. Without clearly carved responsibilities, operators could face duplicative reporting, overlapping compliance obligations, inconsistent interpretations, and slower innovation cycles.

Pelumi Esho, chief executive officer of 91 Payments, a Nigerian fintech, said the emerging clarity is already changing how operators think about the market.

“Regulatory clarity is one of the biggest drivers of innovation because what it means is the players in the market are able to invest confidently, especially when we understand how the regulator will oversee specific activities,” Esho told TechCabal.

The SEC’s ARIP sandbox underscores where the policy is heading. Jude Dike, chief executive officer and co-founder of GetEquity, said the company applied because tokenisation could eventually open Nigerian capital market products to global investors.

“The biggest advantage of the blockchain is the fact that it’s not bordered by geography,” Dike told TechCabal in July. “What happens when investors from South America want to be able to invest in the Dangote refinery or Nigerian debt instruments? Tokenisation changes a lot of that.”

He said participation in the sandbox was also forcing operators to strengthen their compliance and corporate governance structures. 

“[Operators in the ARIP sandbox] have quite a lot of compliance and corporate governance rules—some of which we [GetEquity] were already meeting, along with minimum capital requirements,” Dike said. “We’ve been accepted now, but this is where the work starts. For quite a lot of these things [rules], they need to be met—and they need to be met with haste.”

The direction is becoming clearer. Nigeria is treating parts of the virtual asset ecosystem as financial infrastructure that must be visible to tax authorities, financial intelligence agencies, the central bank, and capital-market supervisors. 

The next phase of policy is likely to focus more on integrating regulated VASPs into the country’s broader financial surveillance architecture. 

That could mean tighter reporting obligations, stronger beneficial ownership requirements, greater use of blockchain analytics, and closer coordination between tax, financial intelligence, capital market and monetary authorities. 

The question is whether Nigeria can increase visibility without creating a regulatory maze.

Its crypto endgame may not be to stop the market. It may be to ensure that significant virtual-asset activity touching the Nigerian economy can eventually be identified, reported, and supervised—and, where applicable, taxed.

How Nigeria manages the tension between those objectives will determine whether its regulatory architecture becomes a competitive advantage or another layer of friction for the industry. 

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