The scale of cryptocurrency activity in Nigeria is no longer a phenomenon that can be dismissed as a niche interest of technology enthusiasts or speculative investors. Nigeria has emerged as one of the world's most active cryptocurrency markets, with millions of Nigerians using digital assets for investment, remittances, payments and as an alternative means of preserving and transferring value. The sheer volume of economic activity associated with virtual assets has consequently transformed cryptocurrency from a technological curiosity into a matter of significant economic and regulatory importance.

Between July 2024 and June 2025, Nigeria received more than US$92.1 billion in crypto inflows, accounting for over 60% of stablecoin inflows into Sub-Saharan Africa¹. What was once regarded largely as a speculative digital experiment has therefore evolved into a significant channel through which value is transferred, stored and exchanged.

The scale of this activity carries implications far beyond the interests of individual crypto investors. Cryptocurrency and other virtual assets increasingly intersect with cross-border payments, remittances, investment, financial technology and commercial transactions. At the same time, their decentralised and borderless character presents familiar regulatory concerns in unfamiliar forms which includes consumer protection, money laundering, fraud, market integrity, taxation and the potential implications for monetary and financial stability. The rapid adoption of stablecoins for cross-border transfers, for instance, has prompted concerns about the implications of widespread digital-dollar usage for monetary policy and regulatory oversight.

For a country such as Nigeria, Africa's largest economy and one of the continent's most active cryptocurrency markets, the regulatory question is therefore not whether virtual assets should exist, but how they should be governed. A regulatory vacuum is unlikely to eliminate the market; rather, it risks leaving a substantial volume of economic activity outside effective mechanisms for transparency, accountability and consumer protection.

Nigeria's regulatory response has consequently evolved from initial caution and restriction towards formal recognition and regulation. The Securities and Exchange Commission (SEC) has established a framework for digital assets, including rules governing digital asset offerings, digital asset custodians, virtual asset service providers and digital asset exchanges. More ecently, the enactment of the Investments and Securities Act 2025 and the signing of the Presidential Executive Order on Virtual Assets Coordination, 2026² signal a further movement towards a more comprehensive and coordinated regulatory architecture. The Executive Order, in particular, established a Virtual Asset Council with the stated objective of harmonising the regulation of virtual assets in Nigeria.

These developments raise a broader legal and policy question: can Nigeria build a regulatory framework capable of protecting investors, preserving financial and economic stability, and combating illicit activity without stifling the innovation and economic opportunities presented by virtual assets?

This article examines the evolving regulatory framework for cryptocurrency and virtual assets in Nigeria, with particular attention to the roles of the SEC and other relevant regulatory institutions, the emerging effort towards inter-agency coordination, and the challenges that accompany the regulation of a rapidly evolving digital economy. It argues that the future of cryptocurrency regulation in Nigeria will depend not merely on the existence of rules, but on the creation of a coherent regulatory architecture that is sufficiently robust to protect the public and sufficiently adaptable to accommodate technological innovation.

UNDERSTANDING CRYPTOCURRENCY AND NIGERIA'S EVOLVING REGULATORY FRAMEWORK

Cryptocurrency is a form of digital or virtual asset that uses cryptographic technology, typically supported by distributed ledger technology, to facilitate the transfer and recording of value. In simpler terms, Cryptocurrency is a type of digital asset that uses technology to allow people to store and transfer value electronically, often without the need for a traditional bank or central authority to process every transaction. Bitcoin and Ethereum are common examples. Unlike fiat currency, cryptocurrency is not issued or guaranteed by the Nigerian government and does not constitute legal tender in Nigeria.

The broader concept of virtual assets, however, extends beyond cryptocurrencies to encompass other forms of digitally represented value capable of being transferred, traded or used for investment or payment purposes. This distinction is increasingly important because Nigerian regulation has moved towards examining the nature and function of the asset or activity, rather than simply the technology through which it operates.

This approach was evident as early as September 2020, when the Securities and Exchange Commission (SEC) stated that crypto-token or crypto-coin investments would fall within its regulatory jurisdiction where the character of the investment qualified as a securities transaction. The SEC further classified different categories of virtual assets according to their characteristics and economic function³.

The regulatory treatment of cryptocurrency in Nigeria has, however, undergone significant evolution.

From Restriction to Regulation

Nigeria's initial approach was largely cautious and restrictive. On 5 February 2021, the Central Bank of Nigeria (CBN) directed banks and other regulated financial institutions to identify and close accounts associated with cryptocurrency transactions and prohibited regulated institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges⁴. The CBN subsequently clarified that the directive did not introduce a new prohibition on cryptocurrency itself, but reinforced its earlier position restricting regulated financial institutions from dealing in or facilitating cryptocurrency transactions⁵.

The regulatory landscape began to change as the continued growth of virtual assets made outright exclusion increasingly difficult to sustain. Rather than treating the sector solely as an activity to be kept outside the formal financial system, regulators began developing mechanisms through which aspects of the sector could be brought within regulatory oversight.

The SEC was at the forefront of this transition. In May 2022, it introduced the Rules on Issuance, Offering Platforms and Custody of Digital Assets, establishing a framework for the regulation of digital asset offerings and the registration of Digital Assets Offering Platforms, Digital Asset Custodians, Virtual Asset Service Providers and Digital Asset Exchanges⁶. The development marked an important shift from simply warning against the risks associated with digital assets to establishing rules under which legitimate participants could operate.

The CBN subsequently adopted a more structured approach to the relationship between virtual assets and the banking system. Its Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers, issued on 22 December 2023, expressly acknowledged the need to regulate VASPs⁷ and established requirements governing their banking relationships with financial institutions⁸. Significantly, the Guidelines superseded the CBN's 2017 and 2021 restrictions on banks' dealings with cryptocurrency service providers, although banks and other financial institutions remained prohibited from holding, trading or transacting in virtual currencies on their own account⁹.

The significance of this development cannot be understated. The regulatory question was gradually changing from whether cryptocurrency should have any relationship with the formal financial system to how that relationship could be managed within a framework of regulatory oversight, anti-money laundering controls and consumer protection.

Statutory Recognition under the Investments and Securities Act 2025

The evolution continued with the enactment of the Investments and Securities Act 2025 (ISA 2025). The Act expressly includes “virtual assets, digital assets and other distributed ledger technology (DLT) offers, tokens and products” among the recognized types of investments under its Second Schedule¹⁰.

This is significant because it moves the regulation of virtual assets beyond the realm of regulatory policy and administrative rules and gives them express recognition within Nigeria's principal capital-market legislation.

The effect, however, is not that every cryptocurrency transaction automatically becomes a securities transaction. Rather, the statutory recognition strengthens the legal basis for regulating virtual assets and DLT¹¹-based products that fall within the investment and securities framework. The character of the particular asset and activity therefore remains critical in determining the applicable regulatory regime.

Towards a Coordinated Framework

The most recent development represents a further evolution in Nigeria's regulatory approach. On 17 July 2026, President Bola Ahmed Tinubu signed the Presidential Executive Order on Virtual Assets Coordination, 2026, with the stated objective of harmonizing the regulation of virtual assets, strengthening cooperation among relevant agencies, protecting citizens from fraud, safeguarding financial-system integrity and enabling responsible innovation¹².⁸

The Executive Order establishes a Virtual Asset Council, chaired by the CBN, with the Nigeria Revenue Service (NRS) and SEC as vice-chairs and the Nigerian Financial Intelligence Unit (NFIU) and Office of the National Security Adviser (ONSA) as members. It also establishes a Virtual Asset Office, domiciled at the CBN, to facilitate day-to-day coordination, information sharing, applications and reporting among the participating agencies¹³.

Importantly, the Order does not create a new regulator or transfer the existing statutory mandates of the participating institutions. Instead, it seeks to coordinate their respective functions. Under the framework, activities involving securities are to be registered by the SEC, while payment, settlement, custody and related services involving non-security virtual assets are to be registered by the CBN, with the Council expected to resolve cases where regulatory responsibility is unclear.

The regulatory journey therefore reveals a clear progression: from restriction, to recognition, to regulation, and now towards coordination.

THE REGULATORY STRUCTURE

Nigeria's virtual asset market now operates within a multi-agency regulatory framework. This is largely inevitable given the diverse functions that virtual assets can perform. A digital asset may constitute an investment product, facilitate the transfer of value, interact with the banking system, or raise questions of taxation and financial crime. The applicable regulator therefore depends substantially on the nature of the activity in question.

The Securities and Exchange Commission (SEC) occupies the principal position where virtual assets and related activities fall within the capital market. Its regulatory framework covers activities including the issuance and offering of digital assets, trading, custody, exchanges and Virtual Asset Service Providers (VASPs). The SEC's current proposed rules further contemplate regulation of tokenisation, trading, custody, transfer and settlement, as well as investment and advisory services involving digital and virtual assets¹⁴. The Commission has also established its Accelerated Regulatory Incubation Programme (ARIP), through which qualifying VASPs and other digital-asset businesses can operate within a controlled regulatory environment while progressing towards full registration.

The Central Bank of Nigeria (CBN), by contrast, is principally concerned with the intersection between virtual assets and the regulated financial system. Its Guidelines on Operations of Bank Accounts for VASPs establish requirements governing the banking relationships of SEC-registered VASPs and other eligible digital-asset entities. Thus, while the SEC's concern is primarily with the investment and capital-market dimensions of virtual assets, the CBN's interest lies substantially in their interaction with banking, payment and financial-system infrastructure.

The regulatory perimeter does not end there. The Nigerian Financial Intelligence Unit (NFIU) is relevant to the anti-money laundering and counter-terrorist financing dimensions of virtual asset activities, while the Nigeria Revenue Service (NRS) has an interest in their tax implications. The inclusion of both institutions, alongside the SEC, CBN and Office of the National Security Adviser, within the 2026 Virtual Asset Council reflects the inherently cross-sectoral nature of virtual asset regulation.

This creates an inevitable question of regulatory overlap. A single VASP may, for example, operate an exchange, provide custody services, facilitate transfers and maintain banking relationships. Different aspects of the same business may therefore engage the mandates of more than one regulator.

The 2026 coordination framework appears designed to address precisely this problem. Rather than replacing the existing regulators with a single cryptocurrency authority, it seeks to coordinate their respective mandates and provide a mechanism for resolving uncertainty where regulatory responsibilities intersect.

The effectiveness of this approach will ultimately depend on whether coordination produces clarity rather than merely additional layers of compliance. For businesses entering the virtual asset market, understanding which regulator has jurisdiction over a particular activity and complying with the requirements applicable to that activity will be as important as understanding the technology itself.

CHALLENGES

The expansion of cryptocurrency regulation presents a difficult balancing exercise. Regulation must be sufficiently robust to protect investors, prevent financial crime and preserve the integrity of the financial system, yet sufficiently flexible to avoid suppressing the innovation that makes digital assets economically valuable in the first place.

Financial Crime and Consumer Protection

One of the strongest arguments for regulating virtual assets is the risk of their misuse for money laundering, terrorism financing, fraud and other illicit activities. The speed, borderless nature and technological complexity of virtual asset transactions can make traditional monitoring and enforcement mechanisms more difficult to apply. Indeed, the CBN's 2023 VASP Guidelines expressly recognised money laundering and terrorism-financing risks as part of the rationale for bringing VASPs within a regulated framework.

Consumer protection presents a related challenge. Unlike traditional financial products, many virtual assets can be highly volatile, technically complex and difficult for ordinary investors to assess. Fraudulent investment schemes, phishing, fake platforms and unauthorised operators can further expose consumers to significant losses. The SEC has therefore continued to emphasise investor protection and has warned the public to verify the regulatory status of persons offering digital-asset investment services.

The difficulty for regulators is that effective consumer protection cannot depend solely on warning investors after harm has occurred. It requires meaningful licensing, disclosure, supervision, custody standards, complaints mechanisms and enforcement against unauthorised operators.

Regulating Without Stifling Innovation

Cryptocurrency and blockchain technology have potential applications extending beyond speculative investment, including payments, tokenisation, financial inclusion and new forms of digital commerce. Excessively burdensome regulation may therefore discourage legitimate businesses, increase the cost of entry and encourage operators to move their activities to less restrictive jurisdictions.

Nigeria's recent regulatory initiatives suggest an awareness of this tension. The SEC's Accelerated Regulatory Incubation Programme (ARIP) allows qualifying VASPs and digital investment service providers to operate within a controlled regulatory environment while their business models and technologies are assessed¹⁵. Similarly, the CBN's current Regulatory Sandbox includes a dedicated VASP track covering areas such as stablecoin payments, virtual asset payments, custody, wallets and token-based products.

These initiatives demonstrate that regulation need not necessarily mean prohibition. The more sustainable approach is regulated innovation, creating sufficient safeguards to protect the public while allowing regulators and businesses to learn from emerging technologies.

The Challenge of Enforcement

A further difficulty lies in enforcement. Cryptocurrency operates across borders, while Nigerian regulatory authority is principally territorial. An operator may provide services to Nigerian users without maintaining a conventional physical presence in Nigeria, making identification, supervision and enforcement considerably more difficult.

Nigeria's emerging framework attempts to address this problem by extending regulatory requirements to certain persons who provide services to Nigerian residents or target the Nigerian market through digital channels. However, the existence of regulatory jurisdiction does not necessarily guarantee effective enforcement.

The effectiveness of the framework will therefore depend not merely on the sophistication of the rules, but on the ability of Nigerian regulators to identify unlawful operators, trace digital transactions, coordinate across agencies and enforce compliance against entities operating beyond traditional institutional boundaries.

Ultimately, the challenge is one of balance. A regulatory framework that protects consumers but makes legitimate innovation commercially impracticable may drive activity underground or offshore. Conversely, a framework that prioritises innovation without adequate safeguards may expose consumers and the wider financial system to unacceptable risks.

Nigeria's objective should therefore not be to choose between regulation and innovation, but to develop regulation that makes responsible innovation possible. The success of the emerging framework will depend on whether it can achieve that balance in practice.

Recommendations

Nigeria's transition towards a structured virtual asset regime is a welcome development. However, the effectiveness of the framework will depend not merely on the existence of regulations, but on how clearly, proportionately and consistently they are applied. In this regard, several considerations are important.

Regulatory coordination should remain a priority. The establishment of the Virtual Asset Council provides an important institutional mechanism for coordinating the mandates of the SEC, CBN, NFIU, NRS and other relevant agencies. The Council should ensure that overlapping regulatory requirements are harmonised and that businesses are able to determine, with reasonable certainty, which regulatory requirements apply to their particular activities. Regulatory coordination should result in clarity rather than additional layers of compliance.

Regulation should remain proportionate and technology-neutral. The regulatory burden imposed on an operator should reflect the nature and risk of the activity rather than the mere fact that it employs blockchain or other emerging technology. A risk-based approach would allow regulators to address genuine threats to consumers and the financial system without unnecessarily discouraging legitimate technological innovation.

Due diligence should precede commercial deployment. Businesses intending to operate within the virtual asset ecosystem should determine their regulatory classification and applicable licensing requirements before launching their products or services. They should also ensure appropriate AML/KYC procedures, contractual protections, consumer disclosures, data-protection measures and tax compliance mechanisms are established from the outset.

Consumer protection and enforcement must remain central to the regulatory framework. Effective licensing alone will not protect consumers from fraudulent operators. Regulators should continue to strengthen supervision, public disclosure of authorised operators, complaint-resolution mechanisms and enforcement against persons operating outside the regulatory perimeter. At the same time, investors should exercise independent due diligence and should not regard regulatory recognition as a guarantee against investment loss.

Finally, Nigeria should preserve room for responsible innovation. The use of regulatory incubation and sandbox mechanisms should be expanded where appropriate to enable regulators to understand emerging technologies while allowing legitimate businesses to develop within controlled environments. Regulation should provide a pathway for innovation to enter the formal economy rather than inadvertently encouraging businesses and capital to migrate to less regulated jurisdictions.

Ultimately, the objective should not be to create the most restrictive virtual asset regime possible, but the most credible and sustainable one. That is, a framework capable of protecting market participants, preserving integrity of the system and providing sufficient certainty for businesses to innovate and invest.

CONCLUSION

Nigeria's regulatory journey reflects a significant shift in its treatment of virtual assets. From initial restriction to recognition, regulation and then, coordination. The emergence of a structured regulatory framework is a necessary response to the growing economic significance of cryptocurrency and the risks that accompany it.

The ultimate test, however, will not be the number of regulations enacted, but whether the framework can provide clarity, effective protection and room for responsible innovation. Nigeria must therefore continue to pursue regulation that is coordinated and proportionate, ensuring that the law protects the integrity of the financial system without unnecessarily constraining the technology and economic opportunities that virtual assets present.

The future of cryptocurrency regulation in Nigeria should not be defined by choosing between innovation and regulation, but by building a framework in which the two can sustainably coexist.

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