Blockchain And Cryptocurrency Regulations: Navigating The Evolving Landscape In Nigeria

• Published date: 27 March 2024
• Subject Matter: Corporate/Commercial Law, Technology, Securities, Fin Tech
• Law Firm: Olisa Agbakoba Legal (OAL)
• Author: Chukwunoyenim Okoh, Emmanuel Agherario and Beverley Agbakoba-Onyejianya

In recent years, Nigeria has witnessed a surge in the adoption of blockchain technology and cryptocurrency, signalling a growing interest in digital assets among businesses and investors.¹ EMURGO Africa, in strategic partnership with PwC, unearthed compelling statistics, reporting the pivotal rise of blockchain investments within Africa. Blockchain funding soared by a stunning 1,668% in 2022 compared to the preceding year, accumulating a total of USD 91 million in countries like Kenya, South Africa, and Nigeria.² However, navigating blockchain and cryptocurrency regulations in Nigeria has been a complex twist with the recent saga with Binance in Nigeria.³

In this article, we explore the dynamic regulatory environment of blockchain and cryptocurrencies in Nigeria, including recent legislative developments and industry responses to these developments.

Blockchain and Cryptocurrency Regulations in Nigeria: The Story So Far

Blockchain and cryptocurrency regulations in Nigeria have undergone significant transformation, shifting from an opposing stance to a more receptive disposition in recent years.

1. Central Bank Of Nigeria Circular Restricting Banks And Other Financial Institutions From Operating Accounts For Cryptocurrency Service Providers:

In February 2021, the Central Bank of Nigeria took a bold step in issuing a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing risks and vulnerabilities inherent in their operations.⁴ This was not a ban on cryptocurrency per say but a strong restriction on banks dealing with crypto assets.

2. Money Laundering (Prevention and Prohibition) Act, 2022:

On 13 May 2022, President Muhammadu Buhari assented to the Money Laundering (Prevention and Prohibition) Bill 2022⁵. The enactment of this Act in 2022 brought a spark of hope in this sector as virtual asset service providers (VASPs) in section 30 were recognised as part of financial institutions. Nigeria's Money Laundering Act 2022 is the first legislative recognition of virtual assets in Nigeria, and it enabled the CBN to revise its earlier prohibition of banking services for VASPs.⁶

3. Securities and Exchange Commission Rules on Issuance, Offering, and Custody of Digital Assets and VASPs:

In the same month that the Money Laundering (Prevention and Prohibition) Act 2022 was passed, the Securities and Exchange Commission issued Rules on Issuance...