NIGERIA Trends and Developments Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
lish a fully capitalised local subsidiary or enter into a “White Label” agreement with an existing NGN2 billion-capitalised local exchange. This has effectively ended the era of borderless crypto-trading in Nigeria, replacing it with a sovereign digital asset perimeter. Fiscal Integration: Taxation as a Proxy for Legitimacy The recapitalisation of the VASP sector has occurred in parallel with the full implementation of the Nigeria Tax Act 2025. Signed into law in June 2025, this leg- islation treats digital assets as chargeable assets. This classification is a double-edged sword; while it sub- jects gains to a corporate income tax of up to 25% (for large companies), it provides the institutional legiti- macy required for large-scale adoption. The ambiguity of the 2017–2023 era has been replaced by a clear, albeit expensive, fiscal roadmap. Well-capitalised VASPs are now mandated to act as tax-reporting agents for the Nigeria Revenue Service (NRS). Under the Nigeria Tax Administration Act 2025, platforms must report granular transaction details, including the naira equivalent at the time of trade, to the NRS automated portal. Failure to comply can result in administrative penalties starting at NGN10 million per month of default. This requirement reinforces the need for high-tier capital. The technological infrastructure required to automate tax-reporting, linkage to user Tax Identifi- cation Numbers (TIN), and real-time VAT collection on transaction fees is significant. Only firms with the NGN2 billion balance sheet have shown the opera- tional capacity to maintain these reporting standards, leading to a flight to quality among sophisticated retail and institutional users. The CBN Pilot Scheme: Bridging TradFi and Crypto On 31 March 2026, the Central Bank of Nigeria (CBN) announced the commencement of an AML/CFT/CPF Supervision Pilot Scheme for a select group of VASPs. This cohort – which includes the cNGN stablecoin consortium, Flutterwave, Paystack, KuCoin and oth- ers – signals a definitive shift towards a multi-agency supervisory model. The focus of the pilot is the cred- ible implementation of the FATF Travel Rule (Recom- mendations 15 and 16).
Participation in this pilot is strictly supervisory and does not confer a new licence, though it serves as a definitive Tier 1 indicator for the selected entities. It suggests that the CBN is focusing its oversight on the crucial intersection where the traditional financial system meets the virtual asset ecosystem. The pilot specifically monitors: • sanctions screening – real-time checking of all transaction participants against the UN, OFAC and Nigerian consolidated sanctions lists; • travel rule compliance – the ability to collect and transmit identifying information on the parties to virtual asset transfers above the prescribed thresh- old; and • liquidity management – ensuring that stablecoin issuers (such as cNGN) maintain 1:1 reserves in liquid naira accounts within the traditional banking system. The success of this pilot is the final hurdle for the broader market. It is expected that by late 2026 the Pilot Scheme will evolve into a permanent VASP banking framework, allowing all fully capitalised SEC- licensed entities to maintain seamless, high-volume settlement accounts with Nigerian deposit money banks. Strategic Advice for Global Market Participants For global enterprises navigating the Nigerian market in 2026, the strategy must shift from innovation-first to capital-and-compliance-first. The high thresholds for DAX and DAC licences mean that a local presence is now a multi-million-dollar institutional commitment. The authors advise international clients to focus on four key pillars of entry. • Capital alignment and structuring: conduct a rigor- ous audit of qualifying capital. The SEC’s paid-up requirement means that capital cannot be bor- rowed or notional. For foreign parents, this often requires a formal capital importation certificate (CCI) to ensure that future repatriation of dividends is protected. • Strategic M&A scouting: monitor the current cohort of 2024–2025 ARIP participants. Many possess strong local user bases and Approval-in-Principle status but may lack the liquidity to meet the June
453 CHAMBERS.COM
Powered by FlippingBook