CBN tests new supervisory model for crypto market after FATF exit

Nigeria’s central bank has begun testing a new supervisory approach for the country’s fast-growing cryptocurrency market months after the country was removed from a global financial watchdog’s grey list, in a move that signals tighter oversight of digital asset activity.

In a directive dated March 31, the Central Bank of Nigeria said it has launched a pilot Anti-Money Laundering, Counter-Financing of Terrorism and Counter-Proliferation Financing supervision programme involving selected Virtual Asset Service Providers (VASPs). The bank said the exercise forms part of its risk-based supervisory strategy aimed at strengthening financial system stability and improving monitoring of virtual asset-related transactions.

The pilot will engage several high-profile fintech and crypto-linked companies operating in Nigeria’s payments and digital asset ecosystem, including Flutterwave, Paystack, KuCoin, Juicyway, KoinKoin and cNGN.

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The central bank said the pilot does not change the current regulatory structure for digital assets or override the roles of other regulators. Instead, it is meant to help authorities better understand the risks, business models and operational practices of firms involved in virtual asset activities.

This move comes after the country exited the grey list of the Financial Action Task Force in October 2025, following efforts to strengthen anti-money-laundering controls and improve transparency in its financial system. Regulators now appear focused on ensuring those reforms translate into practical supervision of emerging financial sectors such as crypto.

The country has one of the world’s most active digital asset markets. Data from blockchain analytics firm Chainalysis shows Nigerians transacted about $92.1 billion in cryptocurrencies between July 2024 and June 2025, nearly three times the volume recorded in South Africa, the next largest market on the continent.

Regulatory oversight of the sector has also been evolving. Under the 2025 Investment and Securities Act, the Securities and Exchange Commission was formally recognised as the primary regulator of digital assets, while the government develops a coordinated system involving multiple agencies.

A policy paper released by the Virtual Asset Regulatory Authority outlined plans for a joint supervisory framework anchored by the Virtual Asset Regulatory Council and the Virtual Asset Regulatory Office, bringing together institutions such as the central bank and the Nigeria Revenue Service to monitor the industry.

The pilot signals that Nigeria is shifting from fragmented oversight to a more coordinated regulatory model as crypto adoption continues to expand across payments, remittances and online trading.

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During the pilot, participating firms will submit monthly compliance metrics and undergo supervisory reviews covering governance structures, customer onboarding processes, sanctions checks, transaction monitoring and cross-border activity. They are also expected to demonstrate readiness to implement global compliance standards, including the Financial Action Task Force’s Travel Rule, which requires the sharing of transaction information between platforms.

The process will involve collaboration with the Nigeria Financial Intelligence Unit, highlighting how seriously authorities are approaching enforcement in the post-grey-list period.

Still, the central bank stressed that participation in the programme does not grant regulatory approval, licensing status or authorisation to the companies involved, indicating that the initiative is primarily designed to gather data and shape future supervision of Nigeria’s rapidly evolving crypto market.