Nigeria’s cryptocurrency exchanges face a difficult regulatory transition as the Central Bank of Nigeria (CBN) introduces capital requirements of up to N15 billion for stablecoin issuers, while new tax obligations threaten to increase transaction costs and squeeze the
margins of local digital-asset businesses, BusinessDay findings revealed.
The combination of higher capital thresholds, multiple taxation and
stricter compliance obligations could force smaller indigenous platforms
to seek fresh investors, merge with stronger competitors or scale down
operations, potentially reshaping competition in one of Africa’s largest
cryptocurrency markets.
The pressure follows the CBN’s introduction of the Regulations for the
Operations of Non-Security Virtual Assets in Nigeria, which took effect
on November 5, 2026. The framework requires providers of other
non-security virtual asset services, including exchanges, custodians,
wallet providers and platform-facilitated peer-to-peer operators, to
maintain minimum paid-up capital of N1 billion.
Read also: Explainer: What CBN’s new crypto rules mean for your wallet, P2P trades and stablecoins
Naira-referenced stablecoin issuers must maintain N10 billion, while
foreign-currency-referenced stablecoin issuers face a N15 billion
threshold. The N1 billion requirement is additional to capital already
committed under a Securities and Exchange Commission (SEC) licence.
Existing operators have 180 calendar days to submit complete licence
applications, leaving businesses with limited time to raise capital or
restructure their operations.
The requirements coincide with the Nigeria Revenue Service’s (NRS) new
cryptocurrency tax framework, which introduces a 1.5 percent stamp duty
on qualifying fiat-to-token and token-to-fiat conversions, a one percent
withholding tax on gross disposal proceeds for certain virtual assets,
and 7.5 percent value-added tax (VAT) on taxable services provided by
virtual asset service providers.
For exchanges operating on relatively thin margins, the combined
obligations could increase the cost of serving customers while requiring
additional investments in regulatory compliance, reporting systems and
financial reserves.
Mela Claude Ake, president of the Stakeholders in Blockchain Technology
Association of Nigeria (SiBAN), however, believes the CBN’s capital
requirements are necessary to establish financial credibility and
protect customers.
Ake argued that businesses handling public funds and issuing stablecoins
must demonstrate sufficient financial capacity to absorb potential
operational failures and protect users.
Read also: Bitget brings stablecoin payments to Nigerians as crypto market expands
“The requirements on paid-up capital … are about ensuring that these
entities have skin in the game and the financial capacity to truly play
in the country’s financial space,” Ake told BusinessDay.
According to him, financial services should not be open to operators
without the resources to provide adequate safeguards, particularly given
Nigeria’s history of financial-sector failures.
“As a trained compliance officer myself, I am privy to some of these
historical happenings. Regulators try as much as possible to avoid a
repeat of those ugly incidents,” he said.
Ake acknowledged that some operators would struggle to meet the
thresholds but said consolidation could provide a practical solution.
“Operators may have to come together, pool their resources, and merge to
form a stronger whole that can meet these thresholds,” he advised.
He also advocated a tiered licensing structure under which operators
would receive different permissions and transaction limits according to
their financial capacity, similar to the framework used for conventional
banks.
His position highlights the central policy dilemma: while stronger
capital requirements could improve consumer protection, excessively high
entry barriers could reduce competition and limit opportunities for
smaller Nigerian technology companies.
Startups warn against suffocating innovation
Jude Ozinegbe, founder and chief executive officer of Cyberchain
Consult, shares the view that stronger oversight is necessary but warns
that the capital thresholds could concentrate the market in the hands of
a few well-funded institutions.
Ozinegbe said the N15 billion requirement for
foreign-currency-referenced stablecoin issuers was understandable from a
financial stability perspective, but represented a significant barrier
for indigenous fintech entrepreneurs and emerging stablecoin projects.
“My first position is that regulation must protect the market without
suffocating innovation,” Ozinegbe said.
Read also: Binance hit by $6.3bn security breach in biggest cryptocurrency heist
He argued that capital requirements should reflect the actual risks and
scale of individual businesses, taking into account transaction volumes,
customer exposure and systemic importance.
A graduated, risk-based framework, he said, would allow smaller but
credible innovators to participate while maintaining appropriate
safeguards.
His concern is that businesses unable to meet the thresholds could move
their operations to more favourable jurisdictions or rely on informal
channels where transactions are harder for regulators to monitor.
This concern is particularly relevant to Nigeria’s peer-to-peer market,
which has historically provided an alternative route for individuals
seeking access to foreign-currency stablecoins and other digital assets.
Ake, however, offered a different interpretation of the CBN’s P2P
provisions. He said the rules do not prohibit direct transactions
between individuals but require third-party platforms facilitating P2P
transactions to identify senders and receivers and make their activities
traceable.
The distinction is important because the regulation targets platform-facilitated transactions rather than eliminating person-to-person exchanges.
Multiple taxes add to the industry’s burden
Beyond capital requirements, taxation could become another determinant
of which platforms remain competitive.
Nigeria recorded $38.1 billion in cryptocurrency activity between July
2025 and June 2026, according to Chainalysis, making it Sub-Saharan
Africa’s second-largest crypto market after South Africa, which recorded
$39.3 billion.
Of the Nigerian figure, users sent $25.2 billion to crypto services, providing a potential channel for tax collection through exchanges and other intermediaries.
Read also: North Korea challenges US over $6.3bn Binance crypto theft allegations
An illustrative calculation suggests that if 10 percent of the $25.2 billion represented qualifying fiat-to-crypto conversions, the resulting $2.52 billion transaction base could generate approximately $37.8 million in stamp duty at the initial purchase stage.
If the same assets were subsequently sold through another qualifying conversion, an additional estimated $37.23 million could be collected, bringing potential collections across both stages to approximately $75.03 million.
This is a scenario rather than a revenue forecast, as not every crypto transaction attracts stamp duty and activity through private wallets, decentralised exchanges and offshore platforms may be difficult to
capture.
Nevertheless, the prospect of repeated charges raises concerns about the
effect on customer behaviour, particularly among frequent traders who
move between naira and stablecoins.
Domestic exchanges received $6.22 billion during the reporting period,
representing half of Nigeria’s centralised exchange inflows, according
to Chainalysis. Their growing share gives the government identifiable
platforms through which it can monitor transactions and enforce
applicable tax obligations.
However, higher transaction costs could weaken the competitiveness of
domestic exchanges if customers increasingly turn to alternative
channels.
Quidax, Busha position for regulated market
Despite the pressure, some established operators see stronger regulation
as an opportunity to build institutional partnerships and improve
confidence in digital-asset services.
Buchi Okoro, co-founder and chief executive officer of Quidax, said the
future of the industry would depend on platforms demonstrating
transparency, regulatory compliance and trust.
Okoro said banks, asset managers, fintechs and businesses across other
sectors were increasingly exploring ways to offer digital assets to
their customers. “Trust is the new currency,” he said, adding that
digital businesses must earn confidence through regulation, transparency
and consistent professional standards.
Read also: Binance freezes withdrawals after $6.3bn record crypto heist
Quidax, which received an approval-in-principle from the SEC, is
positioning itself as an infrastructure partner for institutions seeking
to enter the digital-asset market.
Busha has similarly emphasised its regulatory engagement, pointing to
its participation in the CBN’s Virtual Asset Service Provider pilot
programme and its existing engagement with the SEC and Nigerian
Financial Intelligence Unit.
The company said its business model was designed around compliance,
transparency and cooperation with regulators, while expressing readiness
to deepen engagement with the CBN, NRS and other government agencies.
Its position suggests that businesses with established regulatory
relationships and institutional infrastructure may be better positioned
to navigate the changing environment.
The emerging regulatory structure could therefore produce a market in
which financial strength, compliance infrastructure and access to
institutional partnerships become as important as technology and
customer acquisition.
Industry faces a consolidation test
The emerging regulatory environment could accelerate acquisitions and
partnerships as smaller businesses seek ways to remain operational.
For operators unable to raise the required capital independently,
mergers could provide access to stronger balance sheets, technology
infrastructure and institutional relationships.
However, the cost of compliance extends beyond raising capital. The CBN
requires existing operators to register within 30 days and begin
supervisory reporting within 60 days. Failure to secure approval
attracts a minimum fine of n100 million, alongside an additional n1
million for every day the violation continues, as well as possible
suspension.
The rules also require foreign-currency stablecoin issuers serving
Nigerian customers to operate through locally incorporated, CBN-licensed
entities, potentially changing how international stablecoin businesses
access the market.
Read also: Binance hack exposes risks in Nigeria’s $59bn crypto market
For the government, the opportunity is to improve visibility over a
multibillion-dollar market, strengthen consumer protection and expand
tax collections. For local exchanges, however, the challenge is
surviving the transition without losing customers to less regulated
alternatives.
The outcome will depend on whether regulators can maintain strong
financial safeguards while allowing credible indigenous businesses
sufficient room to compete.
With the 180-day compliance window already running, Nigeria’s crypto
industry is entering a decisive period that could determine whether its
next phase of growth is driven by a competitive local ecosystem or a
smaller group of financially stronger platforms.
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Royal Ibeh is a senior journalist with years of experience reporting on Nigeria’s technology and health sectors. She currently covers the Technology and Health beats for BusinessDay newspaper, where she writes in-depth stories on digital innovation, telecom infrastructure, healthcare systems, and public health policies.
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