Nigeria’s crypto paradox: Legalization without access

Anita Eloebhose, Guest Writer

Nigeria recorded $92.1 billion in crypto transaction value between July 2024 and June 2025 according to Chainalysis, prompting the government to suddenly pivot into this fast-growing sector to boost the country’s revenue. The country now regulates virtual assets and has set the stage for their taxation in 2026. Interestingly, access to a number of crypto exchange websites remain blocked by Nigeria authorities till date.

A yearslong pattern of reversals

The government’s relationship with crypto has been erratic. In 2021, the Central Bank of Nigeria (CBN) issued a letter that effectively reviewed its KYC-hinged 2017 circular—an anti-crypto stance that caught many unprepared. The apex bank, in the letter, instructed financial institutions to halt facilitating transactions in virtual assets and to close the accounts of crypto exchanges and operators.

The restriction was relaxed in 2023, but banks were still prohibited from holding crypto for themselves.

The same anti-crypto regulatory trend resurfaced in February 2024, with a subtle ban on virtual assets. The Nigerian Communications Commission (NCC), directed by the CBN, reportedly ordered telecommunications companies and ISPs to block access to cryptocurrency exchange websites, including Binance, Kraken, Quidax, and Luno. The government justified this action by alleging that these platforms were generally involved in manipulating the foreign exchange market and in the illicit movement of funds, leading to the depreciation of the naira.

A year later, the government classified virtual assets, including cryptocurrencies, as securities under the Investment and Securities Act (ISA) 2025. In addition, under new tax legislation, crypto is officially recognized as taxable property, effective January 1, 2026.

A regulatory framework without an operating market

The issue with the Nigerian government’s inconsistency is that it signals progress without following through. By legalizing crypto while maintaining the telecom block, Nigeria has undermined its policy goals. It has pushed activity into informal, unregulated P2P channels, driven a number of major exchanges out of the country, and has now created a loophole in its new tax regulatory framework.

As a direct consequence of the cyberspace-restriction ban, many users have to deploy VPNs to access these crypto sites, and some disconcertingly migrate to opaque underground networks, including WhatsApp and Telegram, for P2P transactions. According to the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), the intercommunity body in the country’s blockchain industry, these choices have made markets much riskier.

Beyond the telecom block, a great degree of regulation by enforcement may have also contributed to the exit of major players from the market. Binance, a favorite among Nigerians, had to discontinue its naira services in March 2024 due to the clampdown on the global exchange and a number of others.

Tax design undermined by the block

One of the far-reaching effects of what I consider to be a self-sabotaging approach by Nigeria authorities is that it compromises the new tax system. The new tax system relies on self-reporting, buttressed by data submissions from licensed Virtual Asset Service Providers (VASPs).

Exchanges have access to users’ information, including their Tax Identification Numbers (TIN), which serves as a transaction-tracking number. These VASPs are required to submit monthly reports to the Nigeria Revenue Service (NRS), the new tax authority from 2026, serving as an additional enforcement layer that makes crypto taxes mandatory.

However, if users stick to informal crypto platforms where they may not be required to provide KYC information, this will likely increase the rate of tax evasion—as long as their bank transactions are below thresholds that trigger mandatory reporting.

A path forward

The telecom block is not an isolated problem but a systemic one. While it is important to reverse the block as soon as possible, it is also crucial to address the issue concerning crypto regulation from the root to prevent something like the ban from reoccurring and to advance the crypto ecosystem in Nigeria.

• Restore market access: The issue with crypto regulation in Nigeria extends beyond the ban, or semblances or vestiges of it. However, since we cannot allow the ban to continue, restoring proper market access is a great starting point. The NCC stated that it cannot orchestrate an official reversal and that the instruction to unblock must come from either the Office of the National Security Adviser (ONSA) or the SEC. Therefore, a statement from either of these bodies, or a joint statement from the CBN and SEC may be effective in achieving the reversal. A presidential directive to the NCC or the relevant agencies will also be sufficient.
• Bolster inter-agency coordination: Inter-agency coordination is a long-term fix for the present issue. Creating a system that allows key agencies to synchronize will help prevent occurrences like the telecom block, which hangs in the air because it is unclear which body should handle the cancellation. Having a standing committee or MoU would clarify mandates. For instance, it can be reinforced that the SEC is to handle licensing and marketing conduct, the CBN is to handle financial stability and FX oversight, and the NCC, telecom enforcement. Clearly defining each agency’s authority would eliminate command ambiguity and promote time-bound, reviewable interventions.
• Incentivize exchanges to return: To encourage major platforms to (confidently) return to the country or reopen business in the market, Nigeria can offer temporary tax and fee relief to compliant platforms. Such incentives may include reduced licensing fees, temporary tax holidays, or favorable tax treatment during initial market entry. There can also be provision of fast-track licensing for exchanges that adopt proper KYC/AML compliance systems, accelerating market entry for serious players. Another incentive could be a reduction in the upfront capital requirement for smaller, domestic platforms. This would create a more inclusive market structure.
• Strengthen VASP licensing framework: The SEC should publish comprehensive, transparent licensing requirements with clear timelines for approval, as the current process is rather opaque. They could commit to reviewing applications within a certain timeframe, for instance, 90 days maximum. It will make it easier for crypto platforms to understand what they need to do to obtain a license. Not all crypto businesses are the same, nor do they pose the same risks, so licensing requirements should reflect this. A small local exchange serving a few thousand users shouldn’t have to face the same capital requirements as a major international platform handling billions in transactions. This is why the SEC should create different license tiers based on business size and complexity. Finally, the SEC should publicly track the status of all license applications so platforms and investors know where things stand, rather than applications disappearing into a bureaucratic black hole.

Final words

Nigeria’s current position in the crypto landscape is paradoxical. It is trying to regulate what it has failed to legitimize—building frameworks for an industry it won’t allow to exist properly. If the ban remains and the issue remains unaddressed at the root, the country may lose tax revenue, investor confidence, and its position as a potential leader in Africa’s digital economy. It will be relegated by countries willing to make a genuine commitment to regulating these assets in accordance with global best practices.

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Anita Eloebhose is a law graduate and crypto/Web3 writer with over four years of experience creating educational and research-driven content across the blockchain and fintech space. With a strong interest in cryptocurrency regulation and policy, she focuses on simplifying complex legal and technical concepts to help readers better understand digital assets, compliance, and emerging regulatory frameworks.