Nigerian President Bola Tinubu signed an executive order Monday establishing a Virtual Asset Council and directing regulators to create a unified framework for cryptocurrency oversight, marking the West African nation’s most comprehensive attempt to date at bringing digital assets under formal supervision.
The order addresses what the presidency called “fragmentation” in Nigeria’s crypto regulatory landscape, where the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), and other agencies have issued overlapping and sometimes contradictory guidance since 2021. The new 15-member Virtual Asset Council will be chaired by the SEC director-general and include representatives from the CBN, the Nigeria Deposit Insurance Corporation, the Financial Reporting Council, and industry stakeholders.
“Nigeria cannot afford to be a spectator in the digital asset economy,” said Zacch Adedeji, chairman of the Federal Inland Revenue Service, in a statement accompanying the order. “This framework provides clarity for innovators, protection for investors, and a pathway for tax compliance.”
The executive order directs the SEC to register and license virtual asset service providers (VASPs) — including exchanges, custodians, and token issuers — within 180 days. It also mandates the CBN to develop guidelines for banks engaging with licensed VASPs, reversing a 2021 circular that prohibited financial institutions from servicing crypto businesses. That ban drove much of Nigeria’s peer-to-peer trading underground and onto informal channels.
Tax provisions in the order require VASPs to collect and remit capital gains tax on digital asset transactions, with the FIRS tasked with building the reporting infrastructure. Industry estimates suggest Nigeria’s crypto market processes $5-10 billion in annual volume, making it one of Africa’s largest.
“The CBN’s 2021 ban created a regulatory vacuum that bad actors exploited,” said Chris Maurice, CEO of Yellow Card, a pan-African crypto exchange. “A unified framework with clear licensing requirements is long overdue. The key will be implementation speed and whether the SEC has the resources to enforce it.”
Nigeria ranked second globally in grassroots crypto adoption in Chainalysis’ 2023 index, driven by currency depreciation, remittance needs, and a young, tech-savvy population. The naira has lost over 70% of its value against the dollar since 2020, fueling demand for dollar-denominated stablecoins.
The order also establishes a regulatory sandbox for fintech innovation, allowing approved projects to test products under supervisory oversight before full licensing. Penalties for unlicensed VASP operation include fines up to 500 million naira (approximately $310,000) and potential criminal prosecution for repeat offenders.
Source: Cointelegraph
