The government of Nigeria is still open to crypto businesses operating in the country despite the ongoing lawsuit against crypto exchange Binance and the high-profile detention of Binance executive Tigran Gambaryan.
Nigerian Information Minister Mohammed Idris told Semafor that many crypto businesses operate inside the country that are not facing litigation or criminal prosecution.
“This is part of the effort to strengthen our laws, not to cripple anybody. We are ensuring that no one comes and operates without regulation,” Idris told the outlet.
Nigeria filed an $81.5 billion lawsuit against Binance in February, claiming the exchange crashed Nigeria’s local currency, the naira, and said that Binance owed $2 billion in back taxes as the Nigerian government continues to grapple with sensible crypto policy.
The naira M2 money supply has been rapidly increasing since March 2024. Source: Trading Economics
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Nigerian regulations don’t give crypto investors hope
The Nigerian Securities and Exchange Commission overhauled its crypto regulations in December 2024, tightening laws around crypto marketing and advertising.
More specifically, the updated law requires digital asset providers operating in the country to obtain permission before third-party marketing firms can run advertisements on behalf of the firms.
In February, Nigerian regulators also announced a plan to tax crypto transactions for revenue generation.
According to Chainalysis “2024 Global Adoption Index” report, Nigeria ranks second globally for crypto adoption, while India claimed the top spot.
Nigeria ranks second globally for crypto adoption. Source: Chainalysis
Chainalysis also found that the African country received $59 billion in cryptocurrencies between July 2023 and June 2024.
Despite these impressive figures, taxing crypto transactions may not bring in the revenue desired by the Nigerian government.
Nigeria leads African countries in terms of cryptocurrency value received. Source: Chainalysis
Coin Bureau founder and market analyst Nic Puckrin said Nigeria has a robust over-the-counter market for retail crypto trading, which evades centralized exchanges and is difficult to track or tax.
Puckrin added that importers use crypto to circumvent the high volatility of the Nigerian naira and escape foreign exchange risk.
The rapidly depreciating value of the fiat currency makes it unlikely that the importers will stop using crypto, and these importers will be hard-pressed to report their crypto transactions, which can be conducted peer-to-peer, to the Nigerian government.
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