Nigeria established a Virtual Assets Council to address gaps in cryptocurrency regulation, but financial law experts warn the framework remains incomplete.
The council operates under Nigeria's new digital economy strategy, which aims to position the nation as a continental fintech hub. However, the regulatory structure lacks enforcement mechanisms for several critical areas. Consumer protection standards remain vague, with no clear guidelines for asset custody or compensation schemes when exchanges fail.
The framework also fails to adequately address money laundering risks within crypto transactions. Nigeria's Financial Intelligence Unit has limited tools to monitor virtual asset flows, particularly peer-to-peer transfers that bypass regulated platforms. The Central Bank of Nigeria previously restricted bank access to crypto exchanges in 2021, creating parallel markets that operate outside regulatory sight.
Tax treatment of crypto gains remains undefined. Without clear guidance, individuals and businesses cannot determine their reporting obligations, creating compliance uncertainty across the sector.
The Virtual Assets Council includes representatives from the Securities and Exchange Commission, Central Bank, and financial regulators, but coordination between agencies remains weak. Overlapping jurisdictions create confusion about which body holds authority over specific activities. A crypto exchange operating in Nigeria cannot determine which regulator to approach for licensing.
The council does establish baseline requirements for virtual asset service providers, including identity verification and transaction reporting thresholds. These measures align with Financial Action Task Force recommendations on anti-money laundering standards.
Experts note the regulation arrives too late. Nigeria's crypto market already matured without oversight. Approximately 36 million Nigerians hold cryptocurrency, according to blockchain analytics firm Chainalysis, making the nation Africa's largest crypto market by transaction volume.
The gaps create opportunities for fraud. Unregistered platforms continue operating, exploiting regulatory uncertainty. Users investing in these platforms lack recourse when projects collapse.
Financial law specialists recommend the council establish clear custody standards, create a dedicated enforcement unit, and develop inter-agency protocols. Without these additions, the framework