Before March 2025, Nigerian banks couldnât legally touch cryptocurrency businesses. If you ran a crypto exchange, you were stuck. No bank accounts. No payroll. No way to move money without jumping through hidden loops. That changed with the Investment and Securities Act (ISA) 2025, signed into law on March 31, 2025. This wasnât just a tweak-it was a full rewrite of how Nigeria treats digital assets. For the first time, cryptocurrencies are officially classified as securities under Nigerian law. That means the Securities and Exchange Commission (SEC) Nigeria now has full power to license, monitor, and shut down crypto operators who break the rules.
What the SEC ISA 2025 Actually Means
The ISA 2025 didnât just say "crypto is legal." It defined exactly what counts as a digital asset under Nigerian law. Any token, coin, or platform that promises returns based on the effort of others-like staking rewards, yield farming, or pooled investment contracts-is now considered a security. That brings hundreds of projects under SEC oversight. It also means platforms like Quidax and Busha, which got licensed in 2024, are now legally recognized. But if youâre a new crypto startup and you havenât applied for a license? Youâre operating illegally.The SEC doesnât just hand out licenses. They demand ongoing compliance. Every licensed Virtual Asset Service Provider (VASP) must report transaction data, maintain anti-money laundering (AML) logs, and prove they can protect customer funds. Failure to comply? The SEC can freeze operations, revoke your license, or fine you up to âŠ10 million ($6,693) in the first month of violation. Each month after that? Another âŠ1 million ($669) on top.
How Financial Institutions Fit In
Banks used to be banned from working with crypto firms. In 2021, the Central Bank of Nigeria (CBN) told all banks: no accounts, no payments, no services for crypto businesses. That forced exchanges to use informal channels, shell companies, and offshore accounts. But in 2023, the CBN reversed course. Now, banks are allowed-and expected-to provide services to SEC-licensed VASPs. This shift was huge. It meant crypto firms could finally pay staff, deposit revenue, and pay suppliers like any other business.But hereâs the catch: banks arenât just opening accounts. Theyâre now gatekeepers. Before a bank gives a crypto firm a corporate account, they must verify the firmâs SEC license. They must also check the firmâs AML controls with the Nigerian Financial Intelligence Unit (NFIU). If the NFIU flags suspicious activity, the bank can freeze the account. That means your crypto business canât just get a license and relax. You need clean records with both the SEC and the NFIU.
Taxes Are Now Part of the Rules
The SEC doesnât collect taxes-but the Nigeria Tax Administration Act (NTAA) 2025 does. Signed in June 2025 and effective from January 2026, this law makes it clear: crypto gains are taxable. VASPs must report user transaction data to the Federal Inland Revenue Service (FIRS). If youâre a Nigerian user trading Bitcoin, you owe capital gains tax. If youâre a VASP earning fees from trades, you owe corporate tax. The penalties for non-compliance are harsh: âŠ10 million in the first month, then âŠ1 million per month after that. Thereâs no grace period. The law is designed to force reporting, not encourage it.Many crypto businesses assumed they could operate under the radar. Thatâs over. The SEC and FIRS are now sharing data. If your exchange reports $5 million in monthly volume but your bank account shows only $500,000 in deposits? That mismatch triggers an audit. The tools to track this exist. Nigeriaâs digital infrastructure is now built for financial surveillance.
How Nigeria Compares to Other African Markets
Nigeria isnât the only African country with crypto activity. South Africa has a more mature stock market. Kenya has had crypto taxes since 2022. But Nigeriaâs regulatory framework is the most detailed. Between July 2024 and June 2025, Nigeria processed $92.1 billion in cryptocurrency transactions-almost double South Africaâs volume. Nigerians do more peer-to-peer (P2P) trading than any other country in the world. Thatâs not because theyâre speculating more. Itâs because the naira is unstable, and crypto offers a way to preserve value.Other countries picked regulation through taxation. Nigeria picked regulation through control. The SEC doesnât just want to tax crypto. It wants to own the entire ecosystem. Every exchange, wallet provider, and trading bot must be licensed. Every transaction must be traceable. Every user must be verified. Thatâs why Nigeriaâs model is so strict. Itâs not about stopping crypto. Itâs about making sure the government controls it.
What Happens If You Donât Comply?
The penalties arenât theoretical. In October 2024, the SEC shut down three unlicensed crypto platforms in Lagos. One of them had over 120,000 users. The founders were arrested. Their assets were seized. Their bank accounts-opened through shell companies-were frozen by the CBN after the SEC flagged them. Thatâs the new reality.For financial institutions, the risk is reputational. If a bank is found knowingly serving an unlicensed VASP, the CBN can fine the bank, suspend its operations, or even revoke its banking license. Thatâs why banks are now doing deep due diligence. Theyâre not just checking if a company has a license. Theyâre checking who owns it, where the money comes from, and how they handle customer data. One misstep can cost a bank millions.
Whoâs Winning Under the New Rules?
The winners are the licensed players. Quidax, Busha, and other SEC-approved platforms are growing fast. Theyâre partnering with banks. Theyâre hiring compliance officers. Theyâre building KYC systems that meet international standards. Theyâre even starting to offer fiat on-ramps through mobile money and USSD-something unlicensed platforms couldnât do before.Investors are also winning. Before ISA 2025, there was no recourse if a crypto platform disappeared. Now, if a licensed exchange fails, the SEC can step in to protect usersâ assets. Theyâve started requiring cold storage, insurance, and segregation of customer funds. Thatâs a big deal.
But small operators? Theyâre getting squeezed. Many informal traders who used WhatsApp groups or Telegram channels to sell crypto are now out of business. They canât afford the compliance costs. They donât have lawyers. They donât have auditors. The system isnât built for them.
Whatâs Next for Nigeriaâs Crypto Market?
The ISA 2025 is just the start. The SEC is already working on amendments to cover decentralized finance (DeFi) platforms and non-fungible tokens (NFTs). Theyâre also exploring how to regulate crypto mining, which is growing in Nigeria due to cheap electricity and high naira inflation. The CBN is expected to issue guidance on stablecoin usage by banks in early 2026.By 2026, Nigeria is projected to have 28.69 million crypto users. Thatâs nearly 15% of the population. The government knows it canât stop that. So theyâre trying to own it. The goal isnât to kill crypto. Itâs to make sure it runs through their pipes, not around them.
If youâre a financial institution in Nigeria, the message is simple: if you want to work with crypto, get licensed. If youâre a crypto business, get SEC-approved. Thereâs no middle ground anymore. The grey area is gone. The rules are clear. And the SEC is watching.
Are cryptocurrencies legal in Nigeria?
Yes, but only if theyâre operated under the SECâs ISA 2025 framework. Cryptocurrencies are classified as securities, so all exchanges, wallet providers, and trading platforms must be licensed by the SEC. While individuals can hold and trade crypto, businesses must comply with licensing, reporting, and AML rules. Crypto is not legal tender and cannot replace the naira for official payments.
Can Nigerian banks now work with crypto companies?
Yes, but only with SEC-licensed Virtual Asset Service Providers (VASPs). The Central Bank of Nigeria lifted its 2021 ban on banking services for crypto firms in 2023. Banks are now required to verify that a crypto business holds a valid SEC license before opening accounts. They must also ensure compliance with NFIU anti-money laundering rules. Unlicensed VASPs still cannot access banking services.
What are the penalties for not complying with SEC crypto rules?
The SEC can suspend or revoke licenses of non-compliant operators. Financial penalties start at âŠ10 million ($6,693) for the first month of violation, then add âŠ1 million ($669) for each subsequent month. The Nigerian Tax Administration Act 2025 adds separate tax penalties for unreported crypto income. Banks that serve unlicensed VASPs risk fines or license suspension from the CBN.
Do I need to pay taxes on my crypto gains in Nigeria?
Yes. The Nigeria Tax Administration Act (NTAA) 2025, effective January 2026, requires individuals and businesses to report crypto gains as taxable income. VASPs must submit transaction data to the Federal Inland Revenue Service (FIRS). Capital gains from trading, staking rewards, and mining income are all subject to tax. Failure to report can result in monthly fines of up to âŠ1 million.
How do I get a license from SEC Nigeria for my crypto business?
To get licensed, your business must apply to the SEC as a Virtual Asset Service Provider (VASP). Youâll need to submit detailed documentation on ownership, AML/CFT procedures, cybersecurity protocols, and financial statements. You must pass a background check, demonstrate technical security measures, and agree to ongoing reporting. The process takes 60-90 days. Only approved platforms like Quidax and Busha have received licenses so far.
