A Review of the Legal and Regulatory Framework on Cryptocurrency in Nigeria

Abstract

This Brief analysed the legal and regulatory framework on cryptocurrency in Nigeria. The Brief argued that the legal and regulatory framework on cryptocurrency in Nigeria is evolving, driven by the rapid growth of digital assets and the need for effective oversight to protect investors and promote innovation. The research has demonstrated that while the Central Bank of Nigeria's earlier stance on cryptocurrency transactions created uncertainty in the market, recent developments indicate a shift towards recognising and regulating digital assets as securities under the Investment and Securities Act. This shift presents an opportunity for Nigeria to harness the potential of blockchain technology and digital currencies while mitigating the risks associated with fraud and volatility. However, the current regulatory framework remains fragmented, with overlapping responsibilities among multiple regulatory bodies. This complexity can hinder effective enforcement and compliance, emphasising the need for a more cohesive and comprehensive regulatory approach. Ultimately, a robust legal and regulatory framework will enable Nigeria to tap into the benefits of digital assets and position it as a leader in the rapidly evolving global cryptocurrency ecosystem. Accordingly, the Brief recommends as follows: 1. Need for the SEC to provide for strict Anti-Money Laundering and KYC (Know Your Customer) Regulations across all crypto platforms to reduce fraud and illicit activities. 2. Nigeria currently lacks a well-defined ADR framework for resolving disputes arising from cryptocurrency transactions, particularly those involving cross-border transactions, leaving participants vulnerable in the event of conflicts. Hence, there is need for amendment of the Investment and Securities Act, 2025 to make provision for arbitration to resolve disputes, especially for cross-border transactions, similar to the practice in the U.S.A. 3. There is need for the National Assembly to streamline regulatory roles of multiple agencies, especially CBN and SEC, and encourage inter-agency collaboration, for effective regulation of cryptocurrency. 4. There is also a need for continued education around cryptocurrency and its underlying technology to promote a secure and informed investment environment.