The impact of technology on daily living cannot be over-emphasised as it can be felt across all sectors including the financial services sector. This has led to the advent of technology-backed monetary exchange forms or digital currencies. One such area of innovation is cryptocurrencies which have been around for a while now. However, as innovative as the cryptocurrency advent is, it has faced major resistance from countries around the world due to its propensity to be used to aid terrorism-financing, commit fraud, money laundering, tax evasion, illicit funds flow, loss of investment, etc.

Nigeria is not left alone in this trend as it has been very reluctant in granting a general usage to cryptocurrency by issuing circulars warning about its usage, mandating financial institutions such as banks to desist from transacting in it as well as declaring it illegal or worthy of recognition as a legal tender or a form of exchange.

This piece aims at examining the concept of cryptocurrency, it’s status in Nigeria as well as the laws or regulations guiding same so as to determine the disposition of the government towards its use and adoption by banks and citizens as a whole.


Cryptocurrencies are digital currencies in which transactions are verified and recorded by a decentralized system using Cryptography, rather than by a centralized authority. Unlike Central Bank Digital Currencies (CBDCs) that are centralized and controlled by the government, cryptocurrencies are decentralised and therefore incapable of government control which has further fuelled most countries’ resentment towards its use.


The Central Bank of Nigeria has always expressed its non-acceptance of cryptocurrencies as a means of exchange in Nigeria as far back as 2017[i] on grounds that it is not a legal tender and thereby urging banks and individuals to stay away from its use and adoption.

On January 12, 2017, the CBN issued a statement stating that digital currencies such as bitcoin, Litecoin and others are used in terrorism financing, and money laundering given the anonymity of virtual transactions thereby urging banks and other financial institutions to be wary of the risks associated with its use and to desist from transacting in cryptocurrencies pending substantive regulation or decision by the CBN.

Similarly, on February 27, 2018, the CBN warned against investing in cryptocurrencies and posited that dealing in it or facilitating payment through it is prohibited. Thereby, anyone who invests in it does so at their own risk.

By a circular dated February 5, 2021, the CBN directed all Deposit Money Banks (DMBs), Non-Bank Financial institutions (NBFIs) and Other Financial Institutions (OFIs) to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately while reiterating that cryptocurrency use or facilitation as a means of exchange is highly prohibited.

Given the above-stated instances, it is evident that the CBN’s distrust in the use and adoption of cryptocurrencies as a monetary exchange tool cannot be over-emphasised. It would appear, however, that despite the CBN’s distrust in cryptocurrencies, its desire to operate a digital currency of its own controlled by the government unlike regular cryptocurrencies that are unregulated and controlled birthed the Nigerian government CBN controlled Central Bank Digital Currency (CBDC), the eNaira, which was launched on October 25, 2021.[ii]


By a statement dated September 11, 2020[iii] the Securities and Exchange Commission (SEC) made known its intention to regulate digital assets such as cryptocurrencies through the adoption of a three-pronged objective to regulate innovation, hinged on safety, market deepening and providing a solution to problems. SEC’s proposed regulation was targeted at crypto-tokens or crypto-coin investments where the character of such investments qualifies as securities transactions.

However, following CBN’s circular dated February 5, 2021, the SEC in an apparent shift from its earlier position on digital assets made known its intention to collaborate with the CBN towards analysing and better understanding the identified risks of cryptocurrency use and adoption in order to ensure that appropriate regulations are in place if cryptocurrency transactions are permitted in the future.

However, again in another apparent move from CBN’s position, the SEC released the “Rules on Issuance, Offering Platforms and Custody of Digital Assets” (the “Rules”) on May 11, 2022, as parts of its efforts towards regulating digital assets in Nigeria. The Rules is divided into five parts namely:

(a) Part A: Rules on Issuance of Digital Assets as Securities;

(b) Part B: Rules on Registration Requirements for Digital Asset Offering Platforms;

(c) Part C: Rules on Registration Requirements for Digital Asset Custodians;

(d) Part D: Rules on Virtual Assets Service Providers; and

(e) Part E: Rules on Digital Assets Exchange.

Although this innovative step by SEC has been applauded by industry experts and stakeholders, it is not without its own criticisms, especially in the line with the CBN’s prohibition which has not been withdrawn.


Cryptocurrencies may not be recognised by the CBN as legal tender or a form of exchange, nevertheless, it is not illegal as no law or legislation contains provisions criminalizing their using it. This would mean that trading in cryptocurrencies although prohibited by the CBN is not illegal going on the provisions of Section 36(12) of the 1999 Constitution of the Federal Republic of Nigeria which states that:

“Subject as otherwise provided by this Constitution a person shall not be convicted of a criminal offence unless that offence is defined and the penalty, therefore, is prescribed by a written law; and in this subsection, a written law refers to an Act of the National Assembly or a Law of a State, and subsidiary legislation or instrument under the provisions of the law.”

This must have informed the decision of the court in the case of Central Bank of Nigeria v. Rise Vest Technologies Ltd & Ors[iv]where the Federal High Court sitting in Abuja, in a Ruling delivered by Justice Taiwo O. Taiwo held that the CBN’s circular, referenced as BSD/DIR/PUB/LAB/014/001 of February 5, 2021, is not a law and that the CBN lacks the requisite authority to declare the trading of Cryptocurrency illegal by a mere circular.

This would mean that unless a law is enacted tomorrow expressly banning, prohibiting or criminalizing the use of cryptocurrencies, it would only suffer the absence of regulation as its use would never amount to any offence known under the Nigerian laws.


The SEC’s Rules on Issuance, Offering Platforms and Custody of Digital Assets, 2022 appears to be the first regulatory attempt by the Nigerian government to regulate digital assets. However, there would be a need for both the CBN and SEC to be on the same page as far as cryptocurrencies and digital currencies are concerned so as to allow for progress in the sector as well as remove unnecessary ambiguity or complications for investors and stakeholders.

As earlier said, there is no law expressly banning the use and adoption of cryptocurrencies in Nigeria. Based on the decision in CBN v. Rise Vest Technologies Ltd & Ors,[v] the CBN’s Circular is a mere circular which is incapable of declaring cryptocurrency use as illegal. The SEC’s Rules, 2022 is a step in the right direction and indicates of progress in the cryptocurrency evolvement and regulation in Nigeria.

[i] See www.https;// (accessed on August 26, 2022 at 4:20pm)

[ii] For a proper understanding of the eNaira, see on August 29, 2022 at 10:50am)

[iii] (accessed on August 29, 2022 at 4:00 pm).

[iv] Suit No: FHC/ABJ/CS/822/2021 delivered on October 18, 2021

[v] Supra

Written by Muhiz Babatunde Adisa for The Trusted Advisors

Email us: [email protected]

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