Nigeria's relationship with cryptocurrency has never been straightforward. In the space of four years, the country moved from an outright banking ban to a formal licensing framework, with regulators at the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC Nigeria) pulling in competing directions before settling on an uneasy but workable division of authority. For the estimated 13.7 million Nigerians who hold or use digital assets — the third-largest user base in the world according to Chainalysis — understanding exactly where the law stands today is not optional.

This guide breaks down the current framework, traces how it got here, and explains what the Investments and Securities Act 2025 (ISA 2025) changes for every category of market participant.

A Brief History: From Ban to Framework

The story begins in earnest on 5 February 2021, when the CBN issued a circular directing all banks, non-bank financial institutions and payment service providers to close accounts belonging to cryptocurrency exchanges and to cease facilitating crypto transactions. The circular did not criminalise holding crypto — that point was frequently misreported — but it severed the on-ramp: Nigerians could no longer move naira from their bank accounts to buy bitcoin or USDT through a local exchange.

The ban was a response to several converging pressures. The CBN cited money laundering risks, capital flight concerns, and the use of peer-to-peer (P2P) platforms to circumvent official exchange rates. At the time, the naira was trading around ₦480 per dollar on the parallel market while the official rate sat near ₦380, a gap that created persistent arbitrage.

The ban produced the opposite of its intended effect. Binance P2P volumes in Nigeria surged. LocalBitcoins data showed Nigeria consistently ranking among the top five P2P markets globally through 2021 and 2022. USDT, not bitcoin, became the dominant asset — a hedge against naira depreciation rather than a speculative instrument.

By December 2023, the CBN had reversed course. Its circular of 22 December 2023 lifted the 2021 ban and permitted banks to open accounts for Virtual Asset Service Providers (VASPs) registered with the SEC. The reversal was accompanied by new anti-money laundering (AML) guidelines governing how banks must monitor VASP-related flows, including transaction monitoring thresholds and know-your-customer (KYC) requirements aligned with Financial Action Task Force (FATF) Recommendation 15.

What Is the ISA 2025 and What Does It Change?

The Investments and Securities Act 2025, signed into law in February 2025, is the most consequential piece of financial legislation Nigeria has enacted in over a decade. It repeals the ISA 2007 and expands the SEC's jurisdiction in several material directions.

On digital assets, the ISA 2025 does three things of immediate importance.

First, it formally classifies digital assets as securities for regulatory purposes, resolving a long-standing ambiguity. This means that any token offering, staking arrangement, or yield product involving a digital asset is presumed to fall under SEC supervision unless the issuer can demonstrate the asset is purely a commodity or currency — a high bar.

Second, it creates a statutory basis for the SEC's Virtual Assets Regulatory and Investment Protection (ARIP) framework, which had existed as an administrative construct since the SEC's May 2022 rules. ARIP licenses are now backed by primary legislation rather than regulatory guidance, giving the SEC enforcement teeth it previously lacked.

Third, the ISA 2025 introduces a tiered penalty regime. Operators without an ARIP licence face fines of up to ₦10,000,000 for individuals and ₦20,000,000 for entities on first conviction, with asset forfeiture possible on subsequent offences. The previous framework relied on cease-and-desist orders that were routinely ignored.

“The ISA 2025 transforms digital asset regulation from an administrative experiment into statutory law — and with it comes real enforcement capacity for the SEC.”

What Licences Exist Under the ARIP Framework?

The SEC's ARIP framework, now anchored in the ISA 2025, covers four main categories.

Digital Asset Offering Platform (DAOP). Entities that facilitate the issuance of digital tokens to the public. This is the Nigerian equivalent of a primary market licence. The capital requirement stands at ₦500,000,000 (approximately $316,000 at the June 2026 rate of ₦1,580 per dollar).

Digital Asset Exchange (DAX). Entities operating secondary markets where users can trade digital assets against each other or against naira. The minimum capital is ₦1,000,000,000. Binance's Nigerian entity, which came under intense regulatory scrutiny following the detention of its executive Tigran Gambaryan in early 2024, would fall into this category.

Virtual Asset Service Provider (VASP) — Custodian. Entities that hold digital assets on behalf of clients. Capital requirement: ₦500,000,000. Cold storage obligations and proof-of-reserve audits are mandatory on a semi-annual basis.

Digital Asset Broker/Dealer. Smaller operators that buy and sell digital assets as principals or agents. Minimum capital: ₦100,000,000.

All ARIP applicants must file with the SEC's registration portal, submit AML/CFT policies, appoint a compliance officer, maintain records for at least seven years, and demonstrate technical capacity to meet the SEC's cybersecurity minimum standards.

As of the first quarter of 2026, the SEC had granted full ARIP approval to six entities and provisional approval to a further nine. The full list is published on the SEC's website at sec.gov.ng.

How Does the CBN Fit In?

The CBN and SEC now operate a dual-regulator model, which is the source of most confusion for market participants.

The CBN regulates the payment layer. Any fiat-to-crypto or crypto-to-fiat conversion that flows through the Nigerian banking system is a CBN matter. This includes stablecoin transactions settled in naira, P2P platforms that use bank transfers as settlement rails, and mobile money operators that offer crypto on-ramps. The CBN's 2023 VASP AML guidelines remain the operative document here, and banks are required to file Suspicious Transaction Reports (STRs) on any VASP transaction that triggers their thresholds.

The SEC regulates the investment layer. Token offerings, trading platforms, custodians and brokers are SEC territory under the ISA 2025. The SEC also claims jurisdiction over stablecoins that are structured as securities — a definition that, read broadly, could cover yield-bearing USDT products.

The practical boundary is still being tested. The SEC and CBN signed a memorandum of understanding in September 2024 to coordinate supervisory activities and share transaction data. Enforcement remains fragmented in practice, and operators have found themselves answering to both agencies simultaneously on overlapping questions.

What Does Nigerian Crypto Regulation Mean for Ordinary Users?

For individual holders, the direct legal exposure is limited. Owning USDT, bitcoin, or any other digital asset is not illegal under Nigerian law. The ISA 2025 does not criminalise personal holdings.

The risk for retail users arises on two flanks.

The first is FX. The CBN's mandate over naira-denominated flows means that using a P2P platform to buy USDT as a dollar hedge can attract scrutiny if the volumes are large enough to suggest commercial activity. The CBN has previously directed banks to restrict accounts of individuals identified as high-frequency P2P traders. The threshold is not publicly defined, which creates uncertainty.

The second is tax. The Federal Inland Revenue Service (FIRS) issued a guidance note in August 2024 confirming that gains from digital asset disposals are taxable as capital gains under the Capital Gains Tax Act (Cap C1 LFN 2004). The rate is 10% on chargeable gains. Crypto-to-crypto swaps are treated as a disposal and a reacquisition at market value on the date of the swap — consistent with the UK's HMRC approach and more demanding than many users realise.

FIRS has indicated it is building data-sharing arrangements with ARIP-licensed exchanges that will require them to submit annual user transaction summaries above a certain threshold. The reporting minimum had not been gazetted as of the date of publication.

Is Nigeria's Crypto Framework Working?

The honest answer is: partially.

The ISA 2025 and ARIP framework represent a genuine step forward. For the first time, Nigeria has primary legislation that defines digital assets, establishes licensing categories, and provides enforceable penalties. This matters for institutional participants — both local and foreign — who need legal certainty before committing capital.

The Binance episode was instructive. The extended detention of a foreign executive over allegations that Binance facilitated naira manipulation sent a chilling signal internationally, but it also clarified that Nigeria would enforce its financial rules aggressively when it chose to. The outcome of that case — Binance agreeing to pay a $47.4 million settlement to Nigerian authorities in June 2024 — was the largest crypto-related penalty in sub-Saharan African regulatory history.

The gap between law on paper and enforcement capacity on the ground remains wide. The SEC currently has 11 approved or provisionally approved entities for ARIP licences. There are dozens of active P2P and exchange operators serving Nigerian users who hold no licence and face no immediate sanction. The SEC's enforcement budget and technical staffing have not expanded proportionally to the new mandate given by the ISA 2025.

The CBN's position on stablecoins remains ambiguous. USDT is the dominant crypto asset in Nigeria by volume — Nairametrics estimated stablecoins accounted for roughly 65% of all crypto inflows to Nigeria in 2024 — yet the CBN has not issued a specific policy statement on stablecoin supervision. This is the single largest regulatory gap in the current framework.

For the 2026 outlook, the SEC has indicated it expects to publish supplementary ARIP rules covering decentralised finance (DeFi) protocols and stablecoin issuers by the third quarter of 2026. Those rules, when finalised, will determine whether the current wave of USDT-denominated yield products operating informally in the Nigerian market can continue.

For a deeper look at how USDT is priced day-to-day in the Nigerian market, see our full guide on USDT to naira rates.

Regulatory note: This article references regulations issued by the Central Bank of Nigeria (CBN), the Securities and Exchange Commission of Nigeria (SEC), and the Federal Inland Revenue Service (FIRS). All regulatory documents cited are publicly available on the respective agencies' official websites. The Cowrie Report is an independent editorial publication. It does not hold a financial services licence, an ARIP registration, or any other regulatory authorisation from the CBN or SEC, and nothing in this article constitutes financial, investment, legal, or tax advice.

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