Nigeria targets $92bn crypto flows in offshore oversight test

Nigeria has unveiled an ambitious plan to regulate its fast-growing virtual asset market. The move aims to bring more than $92bn in annual cryptocurrency transactions under formal oversight, boost investor confidence, and widen the tax net.

​The proposal, outlined in a new government White Paper, introduces a coordinated regulatory system designed to capture the scale of digital asset activity already embedded in everyday financial transactions. However, experts have warned that gaps regarding offshore platforms and enforcement could test the framework.

Read also: Nigeria targets hidden crypto flows as $92bn oversight faces offshore test

​Between July 2024 and June 2025, Nigerians conducted an estimated $92,1bn worth of transactions on centralised exchanges, a 52% increase from the previous year. This figure excludes large volumes traded through peer-to-peer channels and informal platforms, suggesting the true market size is significantly larger.

​The government stated that rapid growth in usage, driven by a young population and demand for alternatives to traditional banking, has outpaced existing laws. This has left significant gaps in consumer protection, taxation, and financial oversight.

​Distributed model for market oversight

​To address this, authorities created the Virtual Asset Regulatory Authority (VARA), a coordinating structure bringing together key institutions. Unlike a single regulator, VARA will operate through a distributed model, allowing multiple agencies to oversee different aspects of the market while sharing data.

​The Central Bank of Nigeria will supervise payment-related tokens such as stablecoins, while the Securities and Exchange Commission will regulate assets classified as investment products. The Nigeria Revenue Service will focus on taxation, while financial intelligence agencies monitor illicit flows.

​Mandatory registration for service providers

​A central feature of the framework is mandatory registration for all virtual asset service providers operating in Nigeria. Firms that comply will gain access to banking services and regulatory clarity, while those outside the system risk exclusion from the formal financial ecosystem.

​To ease the transition, regulators plan to launch a Virtual Asset Sandbox, allowing firms to operate under supervision while working toward full licensing. The plan also introduces a real-time data-sharing system, described as a Supervisory Telemetry Fabric, to improve visibility into the market.

Read also: How To Win Free Cryptocurrencies With Crypto Casinos

​Challenges of offshore platform dominance

​Obinna Iwuno, digital economy expert, said the success of the framework will depend on how regulators handle offshore platforms. These platforms dominate Nigerian usage but often operate outside local jurisdiction, posing risks to user fund recovery in the event of failure.

​Iwuno called for stronger international coordination and requirements for local incorporation. He noted that while the requirement to separate customer funds from company assets is positive, custody location remains critical. He advised that for real protection, these funds should be held within Nigeria’s jurisdiction.