Nigeria To Allow Cryptocurrencies In New Law While Targeting Risk

After swinging back and forth between acceptance and rejection, Nigeria is finally set to recognise crypto assets via a new bill recently passed by lawmakers, and now awaiting President Bola Tinubu's signature.

The 2025 Nigerian Investment and Securities Bill will replace the law passed in 2007, now considered obsolete in the light of global developments. Under the new law, a crypto asset is defined as "a digital representation of value that can be transferred, digitally traded and used for payment or investment purposes."

This definition does not recognise digital versions of fiat money as crypto assets. It also gives legal backing to platforms and exchanges used for trades, management and safe storage of virtual and digital assets.

The attitude of state establishments to the emergence of cryptocurrencies in Nigeria was initially shaped by panic when there was a surge in adoption starting from around 2015. The trigger was the collapse in the price of crude oil, Nigeria's main source of foreign income, followed by the sharp fall in the value of the naira and the country's first recession in a quarter century.

As Nigerians saw the value they stored in naira evaporate, Bitcoin and other cryptocurrencies became a safe haven to which many fled. But the demand for cryptocurrencies further fuelled the demand for foreign exchange, putting even more pressure on the naira exchange rate. Nigeria soon became the second country after the US with the largest cryptocurrency holdings.