Nigeria's Crypto Banking Ban Reversal: A Complete 2021-2025 Timeline

On February 5, 2021, the Central Bank of Nigeria (CBN) dropped a bombshell: all commercial banks were banned from handling cryptocurrency transactions. The message was clear-crypto was a threat to financial stability. Banks froze accounts, exchanges shut down, and users were forced into peer-to-peer (P2P) markets just to buy Bitcoin. But what followed wasn’t silence. It was a quiet revolution.

The 2021 Ban: Why Nigeria Tried to Shut Crypto Down

The CBN’s 2021 circular didn’t come out of nowhere. It built on a 2017 directive that already blocked Bitcoin transactions through banks. By 2021, Nigeria had become one of the world’s top users of cryptocurrency-not because of government support, but despite it. With inflation eating into the naira and foreign exchange shortages making dollars nearly impossible to get, Nigerians turned to crypto as a lifeline. P2P trading volumes exploded, making Nigeria the second-largest crypto trading hub globally, behind only the United States.

The CBN claimed crypto was "opaque" and threatened the banking system. But the real issue? Cryptocurrency was bypassing their control. People were using USDT and Bitcoin to send money abroad, pay for imports, and save value. The central bank couldn’t track it. It couldn’t tax it. And worst of all, it couldn’t print more naira to fix the problem.

So they banned banks from touching it. The plan? Make crypto disappear by cutting off its oxygen-banking access.

The Underground Boom: How Nigerians Kept Trading

The ban didn’t kill crypto. It made it more resilient.

Local exchanges like Paxful, Binance P2P, and local platforms shifted entirely to P2P. Users traded naira for USDT directly with other individuals, using mobile money apps, bank transfers, and even cash deposits. Banks didn’t know the money was for crypto-they just saw a transfer from Person A to Person B. The system worked because it didn’t need banks to be involved.

By 2022, Nigeria accounted for over 20% of all African crypto trades. Over 30 million Nigerians owned digital assets, according to Chainalysis. The ban didn’t stop adoption-it just pushed it underground. And underground, it grew faster.

The First Crack: Late 2022’s Quiet Policy Shift

By late 2022, things started changing-quietly. Banks began reopening accounts for crypto firms, but only under strict, unannounced conditions. No official statement. No press release. Just a slow thaw.

Why? The economy was crumbling. Foreign reserves hit record lows. The naira was losing value daily. The government realized it couldn’t fight crypto-it needed to harness it. Crypto wasn’t just a threat. It was a workaround for foreign exchange shortages. Nigerians were using it to buy goods, pay for services, and even send remittances without waiting weeks for bank approvals.

The CBN quietly allowed banks to process transactions for crypto firms that could prove they weren’t laundering money. No licensing yet. No rules. Just a test. And it worked.

The Official Reversal: December 2023

On December 18, 2023, the new CBN Governor, Yemi Cardoso, officially lifted the 2021 ban. The announcement was short but powerful: banks could now legally serve cryptocurrency businesses-if they were licensed by the Securities and Exchange Commission (SEC).

This wasn’t just a reversal. It was a full pivot-from prohibition to regulation. The CBN didn’t say crypto was safe. It said crypto was here, and it needed rules.

The new rules were clear:

• Banks can only work with crypto firms holding a valid SEC license as a Virtual Asset Service Provider (VASP).
• Crypto accounts must have transaction limits set by the bank-no unlimited trading.
• Cash withdrawals from crypto-linked accounts are banned. You can’t turn USDT into naira cash at an ATM.
• All transactions must follow AML and KYC rules.

For the first time, crypto wasn’t illegal. It was regulated.

The Legal Final Step: Investments and Securities Act (ISA) 2025

The real turning point came in March 2025, when Nigeria’s National Assembly passed the Investments and Securities Act (ISA) 2025. This law didn’t just tweak rules-it redefined crypto’s legal status.

For the first time, digital assets were officially recognized as securities under Nigerian law. That means Bitcoin, Ethereum, and other tokens could now be treated like stocks or bonds-regulated, taxed, and protected under the same framework as traditional investments.

The SEC became the main watchdog for crypto exchanges, requiring them to register as VASPs, submit quarterly reports, and prove they had robust security and fraud prevention systems. Non-compliant platforms could be shut down, fined, or prosecuted.

This wasn’t just about crypto. It was about bringing Nigeria out of the Financial Action Task Force’s (FATF) Gray List. The country had been on that list since 2019 for weak anti-money laundering controls. Crypto was a big reason why. With ISA 2025, Nigeria now had a legal tool to track crypto flows-and prove it was serious about financial integrity.

Who’s Getting Licensed? The Reality Check

The rules are set. But who’s actually getting approved?

Yellow Card, a major African crypto platform, announced plans to apply for a Nigerian license and partnered with Coinbase to expand into 20 African countries. Other global players like Binance and Kraken are reportedly in talks. But insiders say the licensing process is slow-and selective.

One crypto executive told Semafor Africa: "There aren’t going to be as many exchanges as I don’t think they’ll be giving so many licenses out." The SEC hasn’t published a timeline. No public application portal. No list of approved firms. That’s intentional. Regulators want to control the pace. They don’t want another crypto boom without oversight.

As of November 2025, only three companies have publicly confirmed SEC licensing. Hundreds more are waiting.

The Ongoing Tensions: Binance, Security, and the P2P Paradox

Even with the new rules, the government hasn’t fully embraced crypto.

In March 2024, two Binance executives were detained by Nigerian authorities over allegations of untraceable fund flows. The case was dropped months later, but it sent a clear message: the state still sees crypto as a potential threat.

By May 2024, Nigeria’s National Security Advisor reportedly considered labeling crypto trading a "national security threat"-a move that could have led to criminal penalties for P2P traders. That idea was shelved, but the fear remains.

The biggest contradiction? The government wants banks to support licensed crypto firms-but 80% of Nigerian crypto users still trade via P2P because they can’t get bank accounts. The system is split: formal for big players, informal for everyone else.

What This Means for Nigerians Today

If you’re a Nigerian user in 2025, here’s what you face:

• You can still buy crypto via P2P apps like Binance, Paxful, or local platforms.
• If you want to use your bank account for crypto, you need to go through a licensed exchange.
• You can’t withdraw crypto profits as cash from your bank.
• Large transfers (over 500,000 naira) may trigger AML checks.
• Investing in tokenized assets (like shares in crypto projects) is now legal-but only through SEC-approved platforms.

For many, the system still feels like a trap. You’re not banned-but you’re not fully free either.

The Bigger Picture: Nigeria as a Model for Africa

Nigeria’s journey-from ban to regulation-is now studied by governments across Africa. South Africa, Kenya, Ghana, and Egypt are watching closely. If Nigeria’s system works, they’ll copy it. If it fails, they’ll stay cautious.

The key lesson? You can’t ban decentralized technology. But you can regulate it.

Nigeria didn’t win by fighting crypto. It won by accepting it-and putting rules around it. The next challenge? Making sure those rules work for everyday people, not just big companies.

What’s Next? The Unanswered Questions

Three big questions still hang over Nigeria’s crypto future:

1. When will the SEC open the license application portal publicly?
2. What are the exact transaction limits for crypto accounts?
3. Will P2P trading be formally recognized-or remain in legal limbo?

Until those are answered, the system stays fragile. The ban is gone. But trust? That’s still being built.