## 1. Market Capitalization of Crypto Assets (2020-25)

## Source details

**Canonical URL:** [1. Market Capitalization of Crypto Assets (2020-25)](https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025096-source-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025096-source-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025096-source-pdf.pdf.json)

---

### A. Overview and Market Size
- Global market capitalization of crypto assets increased from US $211 billion in January 2020 to $3.4 trillion at the end of December 2024 (Source: Coingecko).
- Nigeria recorded a volume of $59 billion in crypto transactions from July 2023 to June 2024 (Chainalysis, 2024).
- Most crypto asset trades globally (July 2023–June 2024) by trade size (Chainalysis, 2024):
  - 12.6 percent of all trades were below the equivalent of $1,000 per trade.
  - 11.6 percent were between $1,000 and $10,000.
  - 60.4 percent fell between $10,000 and $1 million.
  - 15.2 percent ranged from $1 million to $10 million.
  - 0.2 percent exceeded $10 million per trade.

### B. Adoption and Asset Preferences in Nigeria
- Nigeria is among the top three countries globally in crypto adoption (Chainalysis 2023 Global Report: India, Nigeria, Indonesia).
- Asset ownership shares among Nigerian crypto investors (Consensys and YouGov, 2024):
  - Bitcoin: 62%
  - Binance: 51%
  - Ethereum: 41%
  - Dogecoin: 30%
  - Tether: 28%
  - Solana: 25%
  - USD coin: 22%
  - Shiba Inu: 18%
  - XRP: 18%
- 73% of Nigerian investors reportedly purchase crypto assets using local currency.
- Until early 2025, all crypto assets traded by Nigerians were assets issued overseas. In early 2025, the SEC authorized cNGN, the first stablecoin issued in Nigeria, purchasable via two licensed local crypto exchanges.

### C. Risks Identified
- Capital flight and circumvention of capital flow restrictions:
  - Unlicensed crypto-trading platforms can be used to move capital out of Nigeria without detection; schemes may involve topping up digital wallets in naira, matching orders, and settling in USD offshore accounts.
  - Movement of funds from bank deposit accounts to fx-denominated stablecoins can reduce bank deposits and create capital outflows to reserve assets held abroad.
- Currency speculation and exchange rate effects:
  - Crypto platforms enabled acquisition of stablecoins (e.g., Tether/USDT, USD Coin/USDC, Pax Dollar/USDP), allowing investors to practically hold “foreign currency.”
  - Divergence between USD/Naira exchange rates quoted on global crypto exchanges and the formal FX market opened arbitrage and speculative opportunities against the naira.
  - Authorities attributed part of exchange rate volatility in 2023 and 2024 to crypto market activity, though lack of detailed data limits quantification.
- Illicit finance and consumer protection:
  - Unregulated platforms pose money laundering, terrorism financing, and consumer fraud risks.
  - Peer-to-peer (P2P) transactions obscure identities of transacting parties, increasing risks of illegal activities and fraud.

### D. Regulatory and Supervisory Actions Taken
- Monetary sovereignty and payments:
  - Naira remains official currency; CBN has no intention to grant crypto assets legal tender status.
  - Banks and licensed financial intermediaries are prohibited from holding assets or liabilities denominated in or linked to crypto assets; crypto assets cannot be used as collateral for loans.
  - CBN circular dated February 5, 2021 (BSD/DIR/PUB/LAB/014/001) barred banks from offering deposit accounts and other financial services to crypto exchanges; revised December 2023 to allow accounts for SEC-licensed crypto firms.
  - eNaira (launched 2021) is a digital currency issued by CBN, not classified as a crypto asset; linked one-to-one to the naira.
- Capital flow and FX measures:
  - Authorities shut down some global crypto platforms operating without a license in 2024; they estimated approximately $26 billion in crypto transactions had passed through those exchanges from sources and users not properly identified.
  - In 2024, authorities banned peer-to-peer (P2P) crypto transactions.
  - Authorities monitor crypto markets daily using Chainalysis data (inflows, outflows, domestic trading volumes) and defined a band for pricing crypto assets in naira/USD at +/-5 percent around the CBN announced exchange rate.
- Legal and regulatory framework:
  - SEC designated as the regulator for the crypto asset industry.
  - SEC classifies all digital crypto assets as securities and defines crypto asset as a digital representation of value that can be digitally traded and functions as a medium of exchange and/or unit of account and/or store of value, not legal tender, not issued/guaranteed by any jurisdiction (SEC Nigeria, 2022 reference).
  - SEC established regulations for issuance, offering platforms, custody, and AML/CFT obligations; oversees Virtual Financial Assets (VFAs) exchanges targeting Nigerian investors.
  - Since 2024, all crypto exchanges required to be incorporated in Nigeria and licensed by the SEC; licensing requires a home-country financial sector authority license and foreign platforms must incorporate a Nigerian subsidiary to operate.
- Taxation:
  - Finance Act of 2023 introduced a 10% tax on gains from the disposal of digital assets, including crypto assets.
  - Enforcement challenges persist: FIRS lacks a formal approach to track crypto ownership and relies on individual self-reporting; many traders use offshore exchanges.

### E. Recommendations and Ongoing Priorities
- Enforcement and supervision:
  - Identify and prevent unlicensed crypto firms from operating in Nigeria.
  - Ensure all exchanges operating in Nigeria meet SEC regulatory standards and provide timely, comprehensive information, including suspicious transactions.
  - Build supervisory and enforcement capacity within financial authorities.
- Fiscal measures:
  - Strengthen FIRS capacity to enforce the 10% tax on digital asset gains through collaboration with major crypto intermediaries; consider mandating firms to withhold taxes on capital gains.
  - Enhance cooperation with international agencies to identify and penalize tax defaulters using offshore exchanges.
- AML/CFT and market surveillance:
  - Ensure AML/CFT supervisory activity is commensurate with money laundering and terrorism financing risks.
  - Develop robust analytical tools for effective market surveillance and identify large or suspicious transactions.
  - Continue cooperating and sharing information with international counterparts.
- FX market and macro policy:
  - Implement sound macroeconomic policies and improve efficiency and transparency of the formal FX market while addressing the large informal FX market to strengthen confidence in the naira.

---

### Incubation Programs, Supervision, and Market Surveillance (SEC Programs and Cross-Border Challenges)

### Incubation programs and authorizations
- SEC established accelerated incubation programs to ensure compliance with basic regulatory rules and obtain authorization to operate lawfully.
- Two firms granted provisional authorization to operate: Busha and Quidax.
- The SEC runs another program to help firms test technology and business models; currently, five firms are participating in it.
- In August 2024, the SEC granted an Approval-in-Principle to Quidax and Busha, giving them the status of legally recognized crypto trading platforms.
  - Approvals-in-Principle is a precursor to the grant of full registration by the SEC, but these two platforms can legally function as crypto-trading platforms in Nigeria.
- The Commission admitted four companies to test their models and technology under its Regulatory Incubation (RI) Program:
  - Trovotech
  - Wrapped CBDC
  - Dream City Capital
  - HousingExhangeNG
- Other applications to these programs are being assessed and would be granted Approval-in-Principle on a case-by-case basis as they meet all SEC requirements.
- With these programs, the SEC expects trading platforms to present themselves and gain formal registration.

### Enforcement and cross-border challenges
- To ensure effectiveness, regulation must be enforced; authorities need to continue shutting down operations of un-licensed exchanges operating in Nigeria in collaboration with foreign authorities.
- The SEC has acknowledged practical challenges in identifying foreign exchanges that provide services to Nigerian residents:
  - Some platforms operate from neighboring countries and continue to serve investors in Nigeria.
  - Nigerian investors can use virtual private networks (VPNs) to avoid detection by authorities.
- Collaboration of Nigerian authorities with foreign counterparts is critical to prevent operation of unlicensed crypto firms.

### Market surveillance and data collection
- Surveillance of the crypto market is still in early stages in Nigeria.
- Both the SEC and CBN have recently established specialized units to monitor flows and market activity.
- Data sources include registered local exchanges and other registered players (Fintech firms) in the Nigerian marketplace.
- Authorities have subscribed to the global database Chainalysis to monitor daily transactions into and out of Nigeria.
- The IMF recommends that the SEC should regularly publish key statistics on the Nigerian crypto market—such as:
  - the number of licensed institutions
  - the number of crypto accounts
  - daily crypto asset turnover

### AML/CFT and financial integrity measures
- Addressing money laundering, terrorism financing, and proliferation financing risks posed by crypto asset activity is critical due to anonymity, speed, and ease of transacting globally.
- Under FATF standards, countries must identify and assess ML/TF/PF risks associated with crypto assets and mitigate them.
- Nigeria has amended its legal and regulatory framework to require crypto asset service providers to apply AML/CFT preventive measures, including:
  - customer due diligence
  - record-keeping
  - reporting suspicious transactions
- The SEC mandates entities to:
  - appoint a compliance officer
  - maintain a compliance manual
  - implement employee education and training programs
- Nigeria is undertaking broader reforms to strengthen its AML/CFT framework following its public listing by the FATF in 2023 for strategic AML/CFT deficiencies (FATF’s “grey listing”).
- The Travel Rule in Nigeria:
  - Any crypto transaction exceeding $1,000 must include detailed information about the originator and beneficiary.
  - Names, digital wallet addresses, and other identifying details of the parties involved must be collected and verified.
  - Transactions below this threshold ($1,000) are exempt but must still include the names and wallet addresses of both the originator and the beneficiary.

### AML/CFT supervision recommendations
- Effective risk-based AML/CFT supervision is key to ensure crypto asset service providers apply mitigation measures in line with their ML/TF risk exposure.
- Specifically, the SEC should:
  - ensure AML/CFT supervisory tools are appropriately tailored for effective engagement with the crypto asset sector
  - undertake supervisory activity commensurate with the ML/TF risk levels of these institutions

### Consumer protection and marketing regulations
- Consumer protection is a critical component of the emerging regulatory regime for crypto assets.
- Existing SEC regulations aim to safeguard investors from fraud and scams originating domestically or internationally.
- Crypto exchanges and wallets are frequent targets of cyberattacks, posing significant risks of financial loss to investors; tracing and recovering funds can be extremely challenging.
- In January 2025, the SEC updated its crypto regulations to strengthen oversight of crypto-related marketing activities by virtual asset service providers (VASPs) and social media influencers.
  - Under the revised Digital Asset Rules:
    - VASPs must obtain prior approval from the SEC before engaging third-party service providers to promote their crypto products.
    - VASPs are required to ensure third-party providers comply with all SEC marketing regulations.
  - These rules apply to any VASP offering services to Nigerian residents and are scheduled to take effect on June 30, 2025.
- Social media influencers (“Finfluencers”) must obtain a “no-objection authorization” from the SEC before publishing digital asset ads and must verify whether the company they are promoting is licensed by the SEC.

### Inter-agency coordination and international cooperation
- An inter-governmental group has been established to coordinate actions on crypto issues.
  - The SEC is the main regulator and supervisor of the crypto industry.
  - Other relevant institutions include the CBN, the Financial Intelligence Unit (FIU), and the Office of the National Security Adviser.
- The working group meets regularly, shares information, and discusses progress on policy initiatives.
- Authorities must build and implement a formal monitoring framework that:
  - is comprehensive
  - covers a wide range of risks, including money laundering, terrorism financing, consumer fraud, tax evasion, and other relevant risks
  - is supported by availability of relevant market data
- The SEC has been an active member of IOSCO and participates in international fora on crypto policy and regulatory responses.
- Nigerian authorities are analyzing regulatory approaches in other jurisdictions and discussing cooperation with various foreign authorities on crypto issues.

### Global market context and stability monitoring
- At the end of December 2024, the global cryptocurrency market capitalization amounted to $3.9 trillion.
- This represented growth of 97 percent over the previous year.
- Bitcoin (BTC) held a dominant share of around 55.72%.
- The IMF recommends closely monitoring the following areas due to potential amplification of vulnerabilities and new risks to global financial stability:
  - (i) crypto assets’ impacts on gross and net cross-border capital flows
  - (ii) changes in financial intermediation, currency substitution, and international currency use
  - (iii) effects of exchange rate and capital account regimes as well as capital flow management measures
  - (iv) financial integrity risks
  - (v) demand for and supply of global financial safety net resources

### Digital infrastructure, Fintech, and cross-border payments
- Nigeria’s marketplace includes more than 600 Fintech firms providing services from retail payments to loans and insurance products.
- Fintech firms offer cross-border payment products that enable individuals and firms to receive payments from overseas at attractive fees and reach users in urban and rural areas.
- Nigeria also licenses money transfer operators (MTOs) important for remittance payments.
- Challenges to a more robust digitalized cross-border payment system include:
  - difficulties in finding correspondent banks due to perceptions or assessments of high ML/TF risks associated with Fintechs and weaknesses in AML/CFT policies
  - prudential regulation for Fintech firms tends to be laxer than for commercial banks, causing distrust, concerns about unfair competition, and regulatory arbitrage
  - scams and fraudulent activities among Fintech users have created distrust among segments of the population
- Under this environment, crypto remains an attractive alternative for many users for cross-border payment needs.
- The IMF recommends leveraging digital technology progress to meet financial inclusion objectives and develop digital public infrastructure (interoperable digital platforms, digital identification systems, digital payments, trusted data sharing) to address inefficiencies in cross-border payments.

### Conclusions and priority actions
- Widespread adoption of crypto assets in Nigeria presents potential challenges to financial stability via capital outflows, currency speculation, money laundering, terrorism and proliferation financing, and consumer fraud.
- Effective enforcement of the regulatory framework is essential and will require regulators to shut down crypto firms unwilling or unable to meet SEC licensing requirements.
- Coordinated efforts with foreign authorities are required to suspend operations of institutions offering services to Nigerian residents from foreign jurisdictions.
- Authorities should continue to strengthen market surveillance by monitoring daily market turnover, including inflows, outflows, and domestic trading volumes.
- Gathering and analyzing data from existing market participants in Nigeria is critical to establishing an effective regulatory and supervisory regime.
- Ensuring enforcement of the taxation regime for crypto investors is a crucial priority to ensure capital gains are accurately reported and prevent tax evasion via the crypto market.

*International Monetary Fund — content from the specified chapter of the Nigeria Selected Issues paper*

### 1. Market Capitalization of Crypto Assets (2020-25) _____________________________________ 3

### 1. Market Capitalization of Crypto Assets (2020-25)

### A. Overview and Market Size
- Global market capitalization of crypto assets increased from US $211 billion in January 2020 to $3.4 trillion at the end of December 2024 (Source: Coingecko).
- Nigeria recorded a volume of $59 billion in crypto transactions from July 2023 to June 2024 (Chainalysis, 2024).
- Most crypto asset trades globally (July 2023–June 2024) by trade size (Chainalysis, 2024):
  - 12.6 percent of all trades were below the equivalent of $1,000 per trade.
  - 11.6 percent were between $1,000 and $10,000.
  - 60.4 percent fell between $10,000 and $1 million.
  - 15.2 percent ranged from $1 million to $10 million.
  - 0.2 percent exceeded $10 million per trade.

### B. Adoption and Asset Preferences in Nigeria
- Nigeria is among the top three countries globally in crypto adoption (Chainalysis 2023 Global Report: India, Nigeria, Indonesia).
- Asset ownership shares among Nigerian crypto investors (Consensys and YouGov, 2024):
  - Bitcoin: 62%
  - Binance: 51%
  - Ethereum: 41%
  - Dogecoin: 30%
  - Tether: 28%
  - Solana: 25%
  - USD coin: 22%
  - Shiba Inu: 18%
  - XRP: 18%
- Reportedly, 73% of Nigerian investors purchase crypto assets using local currency.
- Until early 2025, all crypto assets traded by Nigerians were assets issued overseas. In early 2025, the SEC authorized cNGN, the first stablecoin issued in Nigeria, purchasable via two licensed local crypto exchanges.

### C. Risks Identified
- Capital flight and circumvention of capital flow restrictions:
  - Unlicensed crypto-trading platforms can be used to move capital out of Nigeria without detection; schemes may involve topping up digital wallets in naira, matching orders, and settling in USD offshore accounts.
  - Movement of funds from bank deposit accounts to fx-denominated stablecoins can reduce bank deposits and create capital outflows to reserve assets held abroad.
- Currency speculation and exchange rate effects:
  - Crypto platforms enabled acquisition of stablecoins (e.g., Tether/USDT, USD Coin/USDC, Pax Dollar/USDP), allowing investors to practically hold “foreign currency.”
  - Divergence between USD/Naira exchange rates quoted on global crypto exchanges and the formal FX market opened arbitrage and speculative opportunities against the naira.
  - Authorities attributed part of exchange rate volatility in 2023 and 2024 to crypto market activity, though lack of detailed data limits quantification.
- Illicit finance and consumer protection:
  - Unregulated platforms pose money laundering, terrorism financing, and consumer fraud risks.
  - Peer-to-peer (P2P) transactions obscure identities of transacting parties, increasing risks of illegal activities and fraud.

### D. Regulatory and Supervisory Actions Taken
- Monetary sovereignty and payments:
  - Naira remains official currency; CBN has no intention to grant crypto assets legal tender status.
  - Banks and licensed financial intermediaries are prohibited from holding assets or liabilities denominated in or linked to crypto assets; crypto assets cannot be used as collateral for loans.
  - CBN circular dated February 5, 2021 (BSD/DIR/PUB/LAB/014/001) barred banks from offering deposit accounts and other financial services to crypto exchanges; revised December 2023 to allow accounts for SEC-licensed crypto firms.
  - eNaira (launched 2021) is a digital currency issued by CBN, not classified as a crypto asset; linked one-to-one to the naira.
- Capital flow and FX measures:
  - Authorities shut down some global crypto platforms operating without a license in 2024; they estimated approximately $26 billion in crypto transactions had passed through those exchanges from sources and users not properly identified.
  - In 2024, authorities banned peer-to-peer (P2P) crypto transactions.
  - Authorities monitor crypto markets daily using Chainalysis data (inflows, outflows, domestic trading volumes) and defined a band for pricing crypto assets in naira/USD at +/-5 percent around the CBN announced exchange rate.
- Legal and regulatory framework:
  - SEC designated as the regulator for the crypto asset industry.
  - SEC classifies all digital crypto assets as securities and defines crypto asset as a digital representation of value that can be digitally traded and functions as a medium of exchange and/or unit of account and/or store of value, not legal tender, not issued/guaranteed by any jurisdiction (SEC Nigeria, 2022 reference).
  - SEC established regulations for issuance, offering platforms, custody, and AML/CFT obligations; oversees Virtual Financial Assets (VFAs) exchanges targeting Nigerian investors.
  - Since 2024, all crypto exchanges required to be incorporated in Nigeria and licensed by the SEC; licensing requires a home-country financial sector authority license and foreign platforms must incorporate a Nigerian subsidiary to operate.
- Taxation:
  - Finance Act of 2023 introduced a 10% tax on gains from the disposal of digital assets, including crypto assets.
  - Enforcement challenges persist: FIRS lacks a formal approach to track crypto ownership and relies on individual self-reporting; many traders use offshore exchanges.

### E. Recommendations and Ongoing Priorities
- Enforcement and supervision:
  - Identify and prevent unlicensed crypto firms from operating in Nigeria.
  - Ensure all exchanges operating in Nigeria meet SEC regulatory standards and provide timely, comprehensive information, including suspicious transactions.
  - Build supervisory and enforcement capacity within financial authorities.
- Fiscal measures:
  - Strengthen FIRS capacity to enforce the 10% tax on digital asset gains through collaboration with major crypto intermediaries; consider mandating firms to withhold taxes on capital gains.
  - Enhance cooperation with international agencies to identify and penalize tax defaulters using offshore exchanges.
- AML/CFT and market surveillance:
  - Ensure AML/CFT supervisory activity is commensurate with money laundering and terrorism financing risks.
  - Develop robust analytical tools for effective market surveillance and identify large or suspicious transactions.
  - Continue cooperating and sharing information with international counterparts.
- FX market and macro policy:
  - Implement sound macroeconomic policies and improve efficiency and transparency of the formal FX market while addressing the large informal FX market to strengthen confidence in the naira.

*Source: Excerpt from "REGULATING THE CRYPTO MARKET IN NIGERIA," Selected Issues Paper (May 29, 2025).*

### 23.      The SEC has set up accelerated incubation programs to enable local platforms to

### 23.      The SEC has set up accelerated incubation programs to enable local platforms to

### Incubation programs and authorizations
- The SEC has established accelerated incubation programs to ensure compliance with basic regulatory rules and obtain authorization to operate lawfully.
- Two firms granted provisional authorization to operate: Busha and Quidax.
- The SEC runs another program to help firms test technology and business models; currently, five firms are participating in it.
- In August 2024, the SEC granted an Approval-in Principle to Quidax and Busha, giving them the status of legally recognized crypto trading platforms.
  - Approvals-in-Principle is a precursor to the grant of full registration by the SEC, but these two platforms can legally function as crypto-trading platforms in Nigeria.
- The Commission admitted four companies to test their models and technology under its Regulatory Incubation (RI) Program:
  - Trovotech
  - Wrapped CBDC
  - Dream City Capital
  - HousingExhangeNG
- Other applications to these programs are being assessed and would be granted Approval-in-Principle on a case-by-case basis as they meet all SEC requirements.
- With these programs, the SEC expects trading platforms to present themselves and gain formal registration.

### Enforcement and cross-border challenges
- To ensure effectiveness, regulation must be enforced; authorities need to continue shutting down operations of un-licensed exchanges operating in Nigeria in collaboration with foreign authorities.
- The SEC has acknowledged practical challenges in identifying foreign exchanges that provide services to Nigerian residents:
  - Some platforms operate from neighboring countries and continue to serve investors in Nigeria.
  - Nigerian investors can use virtual private networks (VPNs) to avoid detection by authorities.
- Collaboration of Nigerian authorities with foreign counterparts is critical to prevent operation of unlicensed crypto firms.

### Market surveillance and data collection
- Surveillance of the crypto market is still in early stages in Nigeria.
- Both the SEC and CBN have recently established specialized units to monitor flows and market activity.
- Data sources include registered local exchanges and other registered players (Fintech firms) in the Nigerian marketplace.
- Authorities have subscribed to the global database Chainalysis to monitor daily transactions into and out of Nigeria.
- The IMF recommends that the SEC should regularly publish key statistics on the Nigerian crypto market—such as:
  - the number of licensed institutions
  - the number of crypto accounts
  - daily crypto asset turnover

### AML/CFT and financial integrity measures
- Addressing money laundering, terrorism financing, and proliferation financing risks posed by crypto asset activity is critical due to anonymity, speed, and ease of transacting globally.
- Under FATF standards, countries must identify and assess ML/TF/PF risks associated with crypto assets and mitigate them.
- Nigeria has amended its legal and regulatory framework to require crypto asset service providers to apply AML/CFT preventive measures, including:
  - customer due diligence
  - record-keeping
  - reporting suspicious transactions
- The SEC mandates entities to:
  - appoint a compliance officer
  - maintain a compliance manual
  - implement employee education and training programs
- Nigeria is undertaking broader reforms to strengthen its AML/CFT framework following its public listing by the FATF in 2023 for strategic AML/CFT deficiencies (FATF’s “grey listing”).
- The Travel Rule in Nigeria:
  - Any crypto transaction exceeding $1,000 must include detailed information about the originator and beneficiary.
  - Names, digital wallet addresses, and other identifying details of the parties involved must be collected and verified.
  - Transactions below this threshold ($1,000) are exempt but must still include the names and wallet addresses of both the originator and the beneficiary.

### AML/CFT supervision recommendations
- Effective risk-based AML/CFT supervision is key to ensure crypto asset service providers apply mitigation measures in line with their ML/TF risk exposure.
- Moving forward, authorities should ensure licensed crypto asset service providers comply with the new AML/CFT requirements through risk-based AML/CFT supervision.
- Specifically, the SEC should:
  - ensure AML/CFT supervisory tools are appropriately tailored for effective engagement with the crypto asset sector
  - undertake supervisory activity commensurate with the ML/TF risk levels of these institutions

### Consumer protection and marketing regulations
- Consumer protection is a critical component of the emerging regulatory regime for crypto assets.
- Existing SEC regulations aim to safeguard investors from fraud and scams originating domestically or internationally.
- Crypto exchanges and wallets are frequent targets of cyberattacks, posing significant risks of financial loss to investors; tracing and recovering funds can be extremely challenging.
- In January 2025, the SEC updated its crypto regulations to strengthen oversight of crypto-related marketing activities by virtual asset service providers (VASPs) and social media influencers.
  - Under the revised Digital Asset Rules:
    - VASPs must obtain prior approval from the SEC before engaging third-party service providers to promote their crypto products.
    - VASPs are required to ensure third-party providers comply with all SEC marketing regulations.
  - These rules apply to any VASP offering services to Nigerian residents and are scheduled to take effect on June 30, 2025.
- Social media influencers (“Finfluencers”) must obtain a “no-objection authorization” from the SEC before publishing digital asset ads and must verify whether the company they are promoting is licensed by the SEC.

### Inter-agency coordination and international cooperation
- An inter-governmental group has been established to coordinate actions on crypto issues.
  - The SEC is the main regulator and supervisor of the crypto industry.
  - Other relevant institutions include the CBN, the Financial Intelligence Unit (FIU), and the Office of the National Security Adviser.
- The working group meets regularly, shares information, and discusses progress on policy initiatives.
- Authorities must build and implement a formal monitoring framework that:
  - is comprehensive
  - covers a wide range of risks, including money laundering, terrorism financing, consumer fraud, tax evasion, and other relevant risks
  - is supported by availability of relevant market data
- The SEC has been an active member of IOSCO and participates in international fora on crypto policy and regulatory responses.
- Nigerian authorities are analyzing regulatory approaches in other jurisdictions and discussing cooperation with various foreign authorities on crypto issues.

### Global market context and stability monitoring
- At the end of December 2024, the global cryptocurrency market capitalization amounted to $3.9 trillion.
- This represented growth of 97 percent over the previous year.
- Bitcoin (BTC) held a dominant share of around 55.72%.
- The IMF recommends closely monitoring the following areas due to potential amplification of vulnerabilities and new risks to global financial stability:
  - (i) crypto assets’ impacts on gross and net cross-border capital flows
  - (ii) changes in financial intermediation, currency substitution, and international currency use
  - (iii) effects of exchange rate and capital account regimes as well as capital flow management measures
  - (iv) financial integrity risks
  - (v) demand for and supply of global financial safety net resources

### Digital infrastructure, Fintech, and cross-border payments
- Nigeria’s marketplace includes more than 600 Fintech firms providing services from retail payments to loans and insurance products.
- Fintech firms offer cross-border payment products that enable individuals and firms to receive payments from overseas at attractive fees and reach users in urban and rural areas.
- Nigeria also licenses money transfer operators (MTOs) important for remittance payments.
- Challenges to a more robust digitalized cross-border payment system include:
  - difficulties in finding correspondent banks due to perceptions or assessments of high ML/TF risks associated with Fintechs and weaknesses in AML/CFT policies
  - prudential regulation for Fintech firms tends to be laxer than for commercial banks, causing distrust, concerns about unfair competition, and regulatory arbitrage
  - scams and fraudulent activities among Fintech users have created distrust among segments of the population
- Under this environment, crypto remains an attractive alternative for many users for cross-border payment needs.
- The IMF recommends leveraging digital technology progress to meet financial inclusion objectives and develop digital public infrastructure (interoperable digital platforms, digital identification systems, digital payments, trusted data sharing) to address inefficiencies in cross-border payments.

### Conclusions and priority actions
- Widespread adoption of crypto assets in Nigeria presents potential challenges to financial stability via capital outflows, currency speculation, money laundering, terrorism and proliferation financing, and consumer fraud.
- Effective enforcement of the regulatory framework is essential and will require regulators to shut down crypto firms unwilling or unable to meet SEC licensing requirements.
- Coordinated efforts with foreign authorities are required to suspend operations of institutions offering services to Nigerian residents from foreign jurisdictions.
- Authorities should continue to strengthen market surveillance by monitoring daily market turnover, including inflows, outflows, and domestic trading volumes.
- Gathering and analyzing data from existing market participants in Nigeria is critical to establishing an effective regulatory and supervisory regime.
- Ensuring enforcement of the taxation regime for crypto investors is a crucial priority to ensure capital gains are accurately reported and prevent tax evasion via the crypto market.

*International Monetary Fund — content from the specified chapter of the Nigeria Selected Issues paper*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025096-source-pdf.pdf_