Crypto Regulations in Nigeria 2024

From Bitcointhe advent of 2009, cryptocurrency noticed an interesting change each time. Governments around the world have understood the importance of digital assets and want to formulate rules, policies and regulations dedicated to these assets. blockchain and the crypto space. The most populous country in Africa, Nigeria, is not left out! It is estimated that over 22 million people, or 10.3% of Nigeria’s total population, currently own digital currencies.

The country’s tech-savvy and pro-blockchain youth are eager to embrace crypto, which is why the country is determined to define the governance framework for virtual assets.

In this Coinpedia report, we will discuss crypto regulations in Nigeria in 2024! Let’s dive into it.

Crypto adoption in Nigeria

The government lifted its ban on crypto in December 2023 in Nigeria. Crypto has had a rocky history in Nigeria, but the sector is shedding its association with scams and is on its way to becoming a regulated part of the financial sector. Nigeria had the highest proportion of crypto users in the world, with 32% of respondents reporting using or owning crypto. From July 2022 to June 2023, Nigeria saw a 9% year-over-year growth in crypto transactions, amounting to $56.7 billion.

Factors that have contributed to the growing popularity and crypto adoption in Nigeria. Among the most important are the need for protection against inflation and currency devaluation, the need for financial inclusion and empowerment, and the need for privacy. The adoption of crypto in Nigeria is a phenomenon that reflects the economic and social realities of the country, as these currencies have offered Nigerians a new way to address their challenges.

Is Bitcoin legal in Nigeria?

Cryptocurrencies are not legal tender in Nigeria as they are not recognized by the Central Bank of Nigeria (CBN). The CBN has completely banned commercial banks from engaging in crypto transactions in 2021. Nigeria’s financial system and banking sector are not linked to cryptocurrency trading. However, they recognize the potential of digital assets and believe they could improve financial inclusion here.

Crypto is not illegal in Nigeria! There are currently no laws or legislation criminalizing the use of cryptography. Cryptocurrencies are widely traded on cryptocurrency exchanges across Nigeria.

Crypto Regulations in the Region

Central Bank of NigeriaThe 2021 crypto ban and the growing popularity of digital assets in the country have driven the Securities and Exchange Commission of Nigeria to form a framework for crypto regulation in Nigeria. In 2022, the SEC published a comprehensive 54-page document titled “New Rules on the Issuance, Platform Offering, and Custody of Digital Assets” on its website.

• The document offers guidelines to banking and financial institutions in the country on how to interact with digital assets.
• It clarifies and defines digital assets in Nigeria and clarifies that all digital asset token offerings, ICOs and blockchain-based offerings in Nigeria or by Nigerian issuers will be regulated by the SEC.
• All crypto exchanges providing services in Nigeria must obtain a permit, which gives the SEC full access to their records.
• DAXs must obtain a Virtual Asset Service Provider (VASP) license from the SEC by complying with applicable application processing, registration fee, and other fees requirements.
• Crypto exchanges must provide proof of a minimum paid-up capital of N500 million and a current fidelity bond covering at least 25% of the company’s minimum paid-up capital.
• They must obtain a license from the SEC and register with the Corporate Affairs Commission (CAC), collect the Bank Verification Number (BVN) of crypto company owners, verify the identity of customers, comply with KYC measures and AML and submit a blank declaration. paper to the SEC for approval in case of token issuance!
• Stock exchanges must also have a physical presence in Nigeria to ensure that they operate within the regulations of the Nigerian authorities.
• A licensed DAX must comply with SEC regulations and commit to ensuring the availability of records, ensuring the availability of personnel and resources, security measures and risk management, and appointing a security officer of information to mitigate cyber risks.
• In 2023, Nigeria’s central bank lifts ban on crypto transactions, realizing the importance of cryptography.

What’s new in crypto regulations in Nigeria in 2024?

THE Binance The controversy has led the government to increase pressure on stock exchanges operating in the country. Binance was accused of terrorism financing leading to its partial exit from Nigeria crypto market. On March 7, 2024, the SEC will incorporate revised guidelines for licensing and registration of virtual asset service providers operating in the region.

• These guidelines include measures against money laundering and against the financing of terrorism.
• The recent troubles of the local fiat currency, the Naira, has caused the government to resort to its old methods of restricting investors’ access to crypto services in its search for a scapegoat for its rapid decline.
• On March 7, the SEC updated its guidance for crypto service providers after the government blocked local access to several crypto exchanges like Binance.
• The new SEC guidelines would ensure that “criminals are not registered as operators” in the capital market.

Read also: Binance executive takes legal stand against Nigerian government

Taxation

Crypto is taxable in Nigeria! A specific bill was signed into law in May 2023 by then President Buhari to clarify the tax status of digital assets in the evolving crypto space. The new law imposes a 10% levy on the transfer of all digital assets, including cryptocurrencies. The tax applies to individuals, businesses or any type of entity residing in Nigeria. In May 2023, a 10% tax on gains from the sale of cryptocurrencies was introduced.

Overview of legal status

Nigeria’s central bank has issued the first guidelines for banks opening crypto accounts, while retaining their ban on holding or trading virtual assets for their own account. Nigeria has one of the highest crypto usages in the world. Let’s take a look at what works in Nigeria:

Future prospects and challenges

After the Binance mess, Nigeria has raised questions about crypto usage and operations. According to Reuters, crypto transactions worth about 12% of Nigeria’s total income, or GDP, took place as of June 2023. Cryptocurrencies are not illegal in Nigeria, but businesses must register to operate here. Although Nigeria has demonstrated wide popular adoption of P2P crypto markets and high social acceptance of crypto, it still lags behind in terms of on-off crypto ramps, crypto retail and of DeFi. Nigerians have turned to Bitcoin and other currencies for investment due to the depreciation in the value of the naira.

Blockchain research company based in New York, On-chain analysis, published that crypto trading volume in Nigeria increased by 9% year-on-year to $56.7 billion between July 2022 and June 2023. The growth shows that Nigeria has a market full of enthusiasts of cryptography and that it must therefore be well regulated.

In all

Thus, Nigeria is becoming a major player in the global crypto scene. With a burgeoning youth population eager to adopt new technologies and a government cautiously embracing regulation, Nigeria is poised to become a leader in shaping the future of crypto in Africa. However, challenges remain, from ensuring clear and consistent regulations to fostering a safe and secure environment for all participants.

Will Nigeria be able to overcome these obstacles and unlock the full potential of crypto? Only time will tell, but one thing is certain: Nigeria’s crypto journey is one to watch.

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