In Nigeria, Bitcoin is now a big deal as many rely on it for global remittance. Nigeria is currently one of the leading countries in Africa in terms of Bitcoin.
Being new, Nigerians don’t want to miss out on this technology. According to reports, over 33.4 million Nigerians hold and trade cryptocurrencies.
The restriction of banks from processing Bitcoin transactions has birthed the question of if Bitcoin is legal or illegal in Nigeria. This guide explores trading crypto in Nigeria, as well as the ban by the Central Bank of Nigeria (CBN).
Laws governing the trading of Bitcoin in Nigeria are still vague. Several exchanges where buyers and sellers meet to trade cryptocurrencies exist, leading to the adoption of cryptocurrencies in Nigeria.
Prior to the CBN restricting banks from facilitating crypto transactions, Nigerians traded crypto conveniently with the help of local banks.
This event prompted exchanges to seek alternative means of processing trades without the help of local banks. Exchanges now rely heavily on peer-to-peer trades and other third-party payment companies.
On February 5, the CBN released a ruling that orders all financial institutions to stop facilitating crypto transactions and desist from transacting with entities engaging in crypto. The statement also instructed all banks and financial institutions to close accounts of individuals or entities engaging in this type of transaction.
The CBN warned in the letter that breaches of the directive will attract severe regulatory sanctions.
This letter sparked a lot of reactions and caused a lot of confusion amongst the people as to whether they can still buy bitcoin in Nigeria and engage in crypto transactions. This prompted interviews with top officials of the CBN and they explained that the CBN release is not to discourage people from trading crypto but it shouldn’t be linked to the banking sector.
To clarify things, the CBN explained in a press release on February 7 that the circular was just to enforce the regulation that all banks should not involve in crypto trades, which has been in place since January 2017, stating that no new restriction was placed on digital assets. It also explained that crypto has been a tool to facilitate lots of illegal deals due to its anonymous nature and the directive is to protect the Nigerian financial system and also the majority of Nigerians from the risk associated with crypto transactions.
There are three major reasons that show Bitcoin is legal in Nigeria other than just buying and selling them.
Firstly, Bitcoin is now being used as a legal tender on several platforms. They can be used to purchase items such as call cards, data, subscriptions, and books. Interestingly, several non-profit organizations now accept the coin as a form of a donation to be used for charitable events.
Secondly, an agency of the Nigerian government picked an interest in cryptocurrency. The Nigeria Export Processing Zones Authority (NEPZA) partnered with Binance to develop a virtual free trade zone. NEPZA said the partnership when agreed would birth a virtual free zone similar to the one in Dubai, citing that the vision would be centered on expanding the frontiers of innovations in the operations and management of free zones in Nigeria and Africa as a whole.
“We seek to break new grounds to widen economic opportunities for our citizens in line with the mandate of the authority, the directive of the honorable minister, and the economic development agenda of President Muhammadu Buhari. Our goal is to engender a flourishing virtual free zone to take advantage of a near trillion dollar virtual economy in blockchains and digital economy,” NEPZA said.
Additionally, freelance work in Nigeria is on the rise. Nigerian freelancers that partner with companies abroad now prefer being paid in Bitcoin to enhance swift cross-border remittance.