Nigeria could soon see itself removed from the Financial Action Task Force (FATF) grey list, owing to its decision to categorise virtual assets and investment contracts as securities following the Investment and Securities Act (ISA) 2025, Bloomberg reports.
The landmark legislation, signed into law by President Bola Ahmed Tinubu, aims to address fraud in the digital asset scape while encouraging trust and innovation in blockchain technologies. With the new legislation, Nigeria has positioned itself as the digital finance leader in Africa.
New Laws Address AML and CTF Deficiencies, which Led to Nigeria’s Inclusion on FATF Grey List
In a landmark legal shift, Nigerian lawmakers have recognised cryptocurrencies as securities. Nigeria’s President, Bola Tinubu, recently added digital assets to the Investment and Securities Act (ISA) 2025, which repeals the Investments and Securities Act No. 29 of 2007. According to Forbes Africa and local Nigerian news agency Business Day reports, Nigeria’s new capital markets law officially classifies crypto and other virtual assets as securities for the first time. The landmark legislation is expected to provide greater transparency and increased investments and aims to address fraudulent activities in the space while fostering trust and innovation in the industry.
Nigeria embraced the new legislation after facing years of regulatory uncertainty and tension between its government and the burgeoning crypto sector. On February 1, 2021, supported by concerns over money laundering, terrorism financing, and lack of consumer protection, the Central Bank of Nigeria (CBN) issued a directive prohibiting financial institutions from facilitating crypto transactions. The outright ban evoked public outrage, especially among the country’s tech-savvy youth, who have increasingly turned to crypto as an alternative store of value amid high inflation, economic instability and uncertainty.
Despite the prohibitive ban from the government, Nigeria emerged as the largest cryptocurrency market in Africa by market volume as citizens, spurred by necessity, kept finding creative ways to bypass government restrictions through peer-to-peer (P2P) trading. The persistent demands and growing global adoption rate of digital assets forced the government to reconsider its position, culminating in the enactment of ISA 2025.
In evaluating the ISA 2025 and in speaking to journalists in Abuja on April 9, 2025, Dr Emomotimi Agama, Director General of the Securities and Exchange Commission (SEC), highlights the significance of the new law in addressing anti-money launder (AML) and counter-terrorism financing (CTF) concerns which led to Nigeria’s placement on the FAFT grey list in February 2023. If a country is placed on the FATF grey list, it is subjected to increased monitoring by international bodies due to gaps or deficiencies in its financial oversight.
During his remarks, Dr. Agama said:
“It may interest you to know that the AML-CFT issue is what brought about our inclusion on the grey list.”
Adding;
“The inclusion of this law today provides us an avenue to exit that grey list, and that is very critical to the international community. We are telling the world that we are ready for business and to protect every business operating within Nigeria.”
Lifting Crypto Bans
In December 2022, the Nigerian Central Bank (CBN) published strict guidelines for banks and financial institutions opening crypto accounts. The guidelines were issued after the CBN lifted the ban on banks’ operation accounts for virtual asset service providers (VASPs). At the time, the CNB recognized the need to revise its 2021 policy, stating:
“However current trends globally have shown that there is need to regulate the activities of virtual assets service providers (VASPs), which include cryptocurrencies and crypto assets.”
Just days after the CBN issued a comprehensive ban on banks engaging with crypto, the CBN revised its restrictions on banks facilitating crypto transactions. After a nearly two-year comprehensive prohibition on banks’ involvement with digital currencies, the CBN relaxed its restrictions by allowing crypto firms to open bank accounts with Nigerian banks. Nigeria boasts one of the highest rates of crypto adoption and forced the CBN to revise its stance toward digital assets.
Bringing Cryptocurrencies Under the Purview of the SEC
According to Forbes’ reporting, “the new law provides long-awaited regulatory clarity, bringing Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the direct oversight of the Securities and Exchange Commission (SEC).”
Nigerian financial analyst Olumide Adesina spoke to Forbes Africa, highlighting the importance of this legislation, stating:
“The regulation brings clarity and affirms the input of digital assets in the Nigerian capital market.”
Adesina adds:
“The law would likely attract huge players in the global industry to engage directly by setting up a physical presence with Africa’s biggest crypto market. Finally, it will also widen tokenization usage built on traditional assets and intensify interest among the younger populace.”
Dr. Agama explained that including digital asset regulation in ISA, 2025 offers a way to exit the grey list. In his remarks, Agama said:
“The AML CFT issue is what brought about our inclusion in the grey list; the inclusion of this law provides us an avenue to exit that grey list, and that is very critical to the international community.”
Dr. Agama further underscored a clear message to the global community that Nigeria is ready for business and has measures to protect legitimate business enterprises. As the SEC Director-General, Dr. Agama commented:
“SEC now has the power to clamp down on such entities. We encourage everyone in this space to come under regulation to seek clearance.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.