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Can I legally invest in crypto from Nigeria?

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Cryptocurrency is no longer a strange name in Nigeria. Many people use it to save money and protect themselves from the falling value of the naira. Some use it to send money abroad or operate online businesses. 

In 2021, the Central Bank of Nigeria (CBN) mandated banks not to provide services to crypto businesses. Therefore, it became more challenging for people to purchase or trade crypto directly with their bank accounts. 

Things changed in December 2023, when the CBN released new rules to enable banks to work with registered and reputable crypto companies. Around this period, the Securities and platform Commission (SEC) in Nigeria provided guidelines on how digital assets and crypto platforms should work. 

An significant part of these regulations was that, while owning isn’t illegal, the platforms must follow set rules. At the end of this post, you’ll understand what “legal” means concerning crypto in Nigeria, and how to remain on the right side of the law. 

Key Takeaways

  • Trading and owning crypto in Nigeria is legal, but must be operated within the rules set by the CBN and SEC.
  • The securest way to invest in crypto is through regulated platforms that follow proper verification processes like KYC. 
  • Crypto is popular in Nigeria because of its fragileening naira, high inflation, and the need for quicker and cheaper international money transfers.
  • Crypto laws and guidelines in Nigeria are still developing, so investors need to stay updated on new policies.

Understanding Cryptocurrency in Nigeria

Crypto is a digital money that runs on technology known as blockchain. It is not controlled by the Central Bank of Nigeria or any government. The most common cryptocurrencies in Nigeria are BTC, ETH, and USDT. People use crypto to pay for excellents and services. They can also by investing and trading. 

Why is Crypto very popular in Nigeria

Nigeria isn’t another country using cryptocurrencies; it is one of the global vanguards in its adoption. Here are some reasons why this digital coin is getting more recognition. 

1. fragileening naira

The country’s currency has lost a lot of value in recent years. Therefore, many people rely on crypto like (USDT) to preserve the value of their money. 

2. High inflation

The cost of excellents and services in Nigeria continues to rise, hence crypto offers an alternative way to secure and grow wealth.

3. Remittances

Every year, Nigerians abroad send millions of dollars home to their loved ones, businesses, and more. Cryptocurrencies provide a quicker and affordable way to transfer money compared to money transfer operators or banks. 

4. Youth and tech culture

Nigeria has a quick-growing, young, and tech-savvy population. Many young individuals are learning about blockchain, crypto, NFTs, and more, making crypto adoption quicker. 

How to invest in crypto legally in Nigeria

If you want to hold or purchase crypto in Nigeria without flouting the rules, you need to understand what is allowed. Additionally, you need to learn how to stay on the secure side of the law. Here’s a breakdown of the main steps to investing in cryptocurrencies legally. 

1. Choose SEC-compliant platforms

The Securities and platform Commission (SEC) has mandated that any platform offering crypto services to Nigeria should operate under its regulations. 

Therefore, before opening an account on a crypto platform, these criteria should be followed:

  • Check if the platform is licensed in Nigeria and is following the SEC rules for crypto trading.
  • If it’s a global platform, ensure it has a solid reputation, Know-Your-Customer(KYC) requirements, and transparent policies.
  • Don’t patronize platforms that don’t request any form of identity verification before you trade. Such platforms may be operating outside legal boundaries. 

2. Use bank accounts legally linked to crypto businesses

For some years, Nigeria had to depend on peer-to-peer transfers because banks were restricted from working with crypto companies. However, the . Hence, Nigerian banks can provide accounts to licensed crypto businesses. This update is a notable shift because it means that Nigerians can legally fund their crypto wallet from their Nigerian bank account. 

Also, registered platforms allow you to deposit and withdraw directly in naira. All transactions become traceable and securer, reducing fraud risks. When investing, check if the platform has any partnership with a Nigerian bank, because it’s a excellent sign that they’re operating within the law. 

3. Check for Know Your Customer (KYC) verification

Completing identity checks is one crucial requirement for legal investing. Regulators want to ensure crypto isn’t used for fraud or money laundering. On a legal platform, you’ll be asked to upload a valid ID like an international passport, national ID card, or driver’s license. 

Also, you’ll need to provide your Bank Verification Number (BVN) or National Identification Number (NIN). Sometimes, you may need to submit a proof of address or utility bill. While a KYC process might be viewn as stressful, it is what protects you. If anything goes wrong, it’s easier to resolve disputes because your identity is connected to your account. 

4. Avoid unregulated shortcuts

In Nigeria, crypto trading mostly happens through Telegram channels, unregistered P2P dealers, and WhatsApp groups. While some of these channels are legitimate, they have serious risks. First, you could get scammed with no legal process to recover your money. Also, you might unknowingly transact with funds associated with crime. If you’re caught using questionable platforms, you may struggle to prove that your transactions were legitimate. The securest thing is to use regulated platforms even if they viewm more expensive or sluggisher. 

5. Stay updated on regulations

Crypto laws in Nigeria are constantly changing. What is restricted today might be legal tomorrow. Follow updates from the CBN and SEC to stay legal long-term. Also, look out for changes in tax laws and use platforms that rapidly adapt to new regulations.

Conclusion: The Reality of Legal Crypto Investment in Nigeria

Cryptocurrency in Nigeria isn’t illegal; however, it must be done the right way. Ensure you use registered platforms, complete your verification, and pay attention to CBN and SEC rules. Before investing in crypto, remember that it is still highly volatile, and the rules around it are still changing. Therefore, staying informed is as vital as investing itself. Also, prioritize combining compliance with cautious and smart financial decisions. 

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