Nigeria’s cryptocurrency market remains in regulatory limbo as fintech operators urge the Central Bank of Nigeria (CBN) to adopt a clearer, risk-based framework that defines which digital asset activities are permitted for licensed institutions.
The Fintech Report, published on Monday and based on stakeholder surveys, workshops and industry roundtables, shows that while fintech firms increasingly view crypto assets as relevant to Nigeria’s financial system, regulatory ambiguity continues to limit responsible participation by banks and other regulated players.
Industry participants said the lack of clarity on permissible activities has constrained innovation, discouraged investment and slowed the development of legitimate crypto use cases, particularly in areas such as cross-border payments, digital asset custody and stablecoins.
“Participants broadly agreed on the need for a risk-based, activity-focused regulatory framework,” the report said, noting calls for clearer guidance on what licensed financial institutions can and cannot do in the crypto space.
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Rather than blanket restrictions, fintech operators argued that proportionate regulation would allow authorities to distinguish between lower-risk activities and higher-risk or speculative behaviour, while still maintaining oversight of consumer protection and financial stability risks.
The report highlights strong concerns around consumer protection, with stakeholders urging the CBN to issue clearer advisories on price volatility, fraud prevention and disclosure requirements. While acknowledging the risks of illicit financial flows and market abuse, respondents cautioned against treating all crypto-related activity as criminal.
According to the report, many high-profile crypto scams originate offshore, even though Nigeria often bears the reputational consequences.
Fintech operators said this perception has made it harder to attract credible international partners and investment into the local market.
Stakeholders pointed to regulatory models in jurisdictions such as Singapore and the European Union as potential guides for Nigeria. Both apply risk-based supervision, clearly define permissible activities for regulated entities and provide consumer safeguards without imposing outright bans, the report said.
The regulatory uncertainty persists more than a year after the CBN issued guidelines in December 2023, allowing virtual asset service providers to open accounts with Nigerian banks.
While the policy marked a shift from earlier restrictions, fintech operators said the absence of detailed and enforceable rules has limited its practical impact, leaving banks cautious about engaging more deeply with crypto-related services.
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The report also warned that ongoing efforts by the Securities and Exchange Commission (SEC) to regulate the crypto market may not achieve their full effect without stronger coordination with the CBN, particularly on rules governing licensed financial institutions.
In August 2024, the SEC granted approval-in-principle to crypto exchanges Quidax and Busha under its Accelerated Regulatory Incubation Program, giving them legal recognition. However, more than a year later, no additional approvals have been announced, despite several applications reportedly still under review.
Fintech operators said prolonged regulatory uncertainty risks leaving Nigeria’s crypto market in a holding pattern at a time when other emerging economies are moving to formalise digital asset rules.
Without clearer, coordinated regulation, Nigeria could struggle to balance innovation, consumer protection and financial stability and miss opportunities in a rapidly evolving global market, they warned.
