Nigeria to Ban Person-to-Person Crypto Trade in Dented Naira (2024)

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Nigeria to Ban Person-to-Person Crypto Trade in Dented Naira? ›

Nigeria vowed to ban person-to-person cryptocurrency trading in the naira, taking its latest step to corral an industry which the West African nation blames for harming the battered local currency.

Central Bank of Nigeria (CBN)

Given that there is no legislation prohibiting cryptocurrency, the CBN's approach to regulating it has been in the form of directives or guidance to its regulated entities, including banks and other financial institutions.

In February 2021, the central bank prohibited banks and other financial institutions from dealing in or facilitating transactions in crypto assets, citing money laundering and terrorism financing risks. But that did not dampen Nigerians' appetite for crypto.

Nigerian cryptocurrency exchanges such as Quidax, Luno, and Yellow Card provide a straightforward way to sell your crypto for Naira. These exchanges often offer a variety of trading pairs and provide liquidity, allowing users to convert their digital assets into local currency seamlessly.

Prevalence. According to a 2020 online survey, 32% of participating Nigerians used cryptocurrencies. With a total cryptocurrency transaction volume amounting to $400M, Nigeria ranks third after the United States and Russia according to 2020 estimates.

The government of Nigeria has blocked access to cryptocurrency exchanges operating in the country in an attempt to stem the devaluation of the naira.

The Nigerian government took action Tuesday, blocking the websites of major crypto platforms including Binance, Forextime, OctaFX, Coinbase, Kraken, FXTM, and others. The world's largest crypto exchange Binance confirmed its website is inaccessible in Nigeria though its app remains functional for some users.

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Nigeria has launched eNaira, a central bank digital currency (CBDC), the first African nation to do so and one of only five countries worldwide. Launched on 25 October 2021, eNaira has been developed to complement Nigeria's physical currency, not replace it.

Authorities said Binance manipulated exchange rates through speculation and rate-fixing, leading to the devaluation of the naira. The government also accused the company of terrorism financing and money laundering, saying $26 billion worth of transactions on the platform were untraceable.

The implication of this is that where the holder of a digital asset sells that digital asset, any profit that accrues from the sale of that asset will be subject to capital gains tax at the rate of 10%. Based on the above, capital gains from the disposal of digital assets are taxable at the rate of 10% in Nigeria.

It is legal to trade Forex in Nigeria as the Nigerian Government doesn't have any laws governing the legality. The Financial Services Regulation Coordinating Committee (FSRCC) of the Central Bank of Nigeria control international monetary exchange overseeing outgoing cash-flow from the country⁽¹⁾.

Forex trading in Nigeria is legal. Residents can engage in Forex market activities using their personal funds. However, it is crucial for traders to adhere to local tax laws. In Nigeria, Forex traders are typically subject to a 10% capital gains tax on all gross profits.

Last year the Nigerian Securities and Exchange Commission (SEC) declared that “Binance Nigeria is neither registered nor regulated by the Commission and its operations in Nigeria and are therefore illegal.