In a bid to stay ahead of emerging risks, the apex bank has launched a pilot supervisory programme focused on selected Virtual Asset Service Providers (VASPs).

Behind this move lies a deeper concern: safeguarding the financial system from the shadows of money laundering, terrorism financing, and proliferation threats. With the digital asset space evolving at a rapid pace, the CBN’s initiative signals a proactive effort to understand and manage the risks shaping this new financial frontier.

The initiative, anchored on existing legal frameworks including the Money Laundering (Prevention and Prohibition) Act 2022 and the Banks and Other Financial Institutions Act 2020, signals a more structured regulatory engagement with operators in the virtual asset ecosystem.

CBN in a statement said the pilot forms part of its broader risk-based supervisory strategy designed to “strengthen financial system stability and market integrity oversight of virtual asset-related activities within the Bank’s mandate.”

It noted that the exercise is not a shift in policy direction regarding digital assets but rather a supervisory engagement to deepen its understanding of emerging risks and operational models.

“This pilot does not alter, replace or supersede the existing regulatory framework governing virtual assets in Nigeria or the mandates of other competent authorities,” the CBN stated.

Consequently, it selected industry players for the initial phase which include Flutterwave, Paystack, KuCoin, alongside cNGN, Juicyway and KoinKoin.

The central bank noted that the programme is designed to build “a structured understanding of AML/CFT/CPF risks, business models, and operational practices across participating entities,” while also supporting firms to strengthen compliance frameworks in line with global standards.

In particular, the pilot aligns with recommendations of the Financial Action Task Force, especially around the implementation of the Travel Rule, which mandates transparency in cross-border digital asset transactions.

Participants in the pilot are expected to submit monthly compliance reports and key performance indicators, undergo detailed reviews spanning governance, customer onboarding and transaction monitoring, and demonstrate readiness to implement global compliance standards.

The apex bank further stressed that “participation in the pilot is strictly supervisory and does not confer any regulatory status, approval, licensing right, or authorisation on participating entities,” underscoring its cautious approach to the still-evolving sector.

The pilot will run in phases, with subsequent cohorts already scheduled, as the central bank intensifies efforts to close regulatory gaps and align Nigeria’s financial system with international best practices.

With close to ten years of experience in digital finance, Bidemi has led Flashchange from idea to impact, with the Flashchange app now recognized for its fast, secure and user-friendly trading experience.

Currently launching a second product; a cross border payment platform, Bidemi is passionate about transforming Africa’s financial ecosystem.

Bidemi is an alumnus of Lagos Business school and Strathmore Business School where he has completed various executive programs. He also holds a bachelor’s degree from Obafemi Awolowo University.

In this interview with Techeconomy, he speaks on Nigeria’s crypto tax act, VASP licensing, and economic growth. Excerpt:

TE: With Nigeria processing an estimated $92.1bn in crypto transactions in a year, according to PwC, how can the industry help convert this scale of activity into measurable economic growth and national value?

Bidemi Oke: Transaction volume on its own does not create economic value, structure does. Nigeria can convert crypto activity into measurable value by formalizing the ecosystem through licensing, reporting standards and financial integration.

Once crypto flows through recognized, regulated channels, it becomes visible to policymakers, taxable where appropriate and capable of supporting employment, consumer protection and data-driven policy decisions.

The shift from informal participation to regulated participation is what turns scale into sustainable economic contribution.

TE: If crypto is fully integrated into Nigeria’s formal financial system, which sectors are likely to see the greatest economic impact?

Bidemi: If crypto is coherently integrated into Nigeria’s formal financial system, the benefit would ripple across multiple sectors. The most immediate gains would be seen in fintech, payments, SMEs and the broader digital economy. Crypto infrastructure reduces settlement friction, enables programmable finance and opens alternative funding pathways for businesses.

Capital markets would also benefit through asset tokenization and improved liquidity. Crucially, it is significant to know that secondary sectors such as cybersecurity, compliance, software engineering and digital infrastructure would expand in parallel, creating skilled employment and strengthening Nigeria’s technology backbone.

TE: How can Nigeria’s new Tax Act be applied to crypto in a way that boosts revenue without stifling innovation or driving the market underground?

Bidemi: From a market standpoint, the government’s objective should be to tax value creation, not participation. The government can balance revenue generation and innovation by taxing real value rather than every transaction. This means focusing on profits made by crypto businesses and gains realized by investors, rather than routine transfers or everyday users.

When tax rules are clear, proportional, and applied through licensed entities, compliance becomes simple and natural.

Usually, low entry barriers and predictable rates keeps innovation onshore, prevents activity from slipping back into informal channels and allows the government to grow sustainable revenue alongside a healthy, evolving market.

TE: Beyond taxation, what long-term economic benefits can crypto unlock for Nigeria?

Bidemi: Beyond revenue, crypto offers Nigeria a strategic opportunity to build human capital and exportable digital expertise. It supports high-skill job creation in blockchain engineering, cybersecurity, compliance, data analytics and financial education.

A regulated ecosystem will attract long-term foreign and diaspora investment into Nigerian platforms, helping retain local talent and reduce brain drain.

Over time, crypto would help improve efficiency in payments, trade settlement and digital commerce, thereby enhancing Nigeria’s competitiveness in the global digital economy.

TE: What concrete steps are currently being taken to license and regulate Virtual Asset Service Providers (VASPs) in Nigeria, and how critical is this to market confidence?

Bidemi: SEC has introduced structured VASP licensing frameworks, operational guidelines and sandbox initiatives covering exchanges, custodians and wallet providers. These frameworks were built to emphasize AML/KYC compliance, governance, risk management and capital adequacy.

This is a critical step because credible markets are built on trust. Licensing filters out systemic risk, establishes accountability and provides the regulatory certainty required for long-term market development.

TE: How will proper licensing help protect consumers while also attracting institutional and foreign investment into Nigeria’s crypto ecosystem?

Bidemi: Proper licensing protects consumers by enforcing minimum standards for custody, security, transparency and operational conduct, while providing clear legal recourse.

For institutional and foreign investors, licensing is a signal of regulatory seriousness and market stability. This automatically transforms Nigeria from a high-participation crypto market into an investable one, capable of supporting institutional liquidity, global partnerships and long-term infrastructure investment that benefits the entire system.

TE: What lessons can Nigeria learn from other countries that have successfully regulated crypto?

Bidemi: Jurisdictions such as the UAE, Singapore, and Switzerland demonstrate that crypto regulation works best when it is clear, adaptive and economically intentional. These countries began with foundational rules, engaged closely with industry participants and refined their frameworks as the market matured.

The core lesson from this is that regulation should evolve with innovation and not trail behind it or attempt to suppress it.

Nigeria does not need to replicate any model wholesale, instead, we need a locally grounded framework that aligns with global standards while reflecting domestic realities

From sophisticated money-laundering networks to cyber-enabled fraud rings, criminal actors are exploiting gaps in regulation and oversight.

As traditional finance evolves, so too have the methods and opportunities for abuse, and nowhere is this more evident than in the digital asset space.

Cryptocurrency and other digital assets promised a more inclusive and efficient financial system. But without the right guardrails, innovation can inadvertently create new avenues for exploitation. Over the last several years, financial crime has grown alongside the digital economy.

According to a Chainalysis report by July 2025 over $2.17 billion were reported stolen from cryptocurrency services. But behind these numbers are real people.

Small businesses locked out of working capital after falling victim to crypto scams. Families losing savings to impersonation schemes.

Young founders forced to shut down promising ventures because a single fraud incident wiped out their liquidity. Financial crime in digital assets is not abstract. It is personal, and its impact is often irreversible.

From darknet markets moving illicit funds to ransomware groups demanding payment in digital assets, criminals increasingly leverage digital currencies because of weak oversight, inadequate identity verification, and jurisdictional gaps in enforcement.

It’s why anti-money-laundering (AML) and counter-terrorist financing (CTF) controls are not bureaucratic niceties, they are essential infrastructure for a functioning financial system.

Regulation is not a “nice-to-have”; it’s the safeguard that separates legitimate innovation from systemic risk.

The Risk Landscape Gets Sharper as Digital Assets Grow

In the absence of clear rules, digital assets have often been described as the Wild West of finance, a frontier of opportunity with little accountability.

Stories highlighting lost wallets and exchange hacks grab headlines, but the larger issue is deeper: when markets operate without enforceable standards for transparency and oversight, bad actors thrive.

The digital asset ecosystem can be a force for economic inclusion, especially in emerging markets across Africa.

But that promise will always be limited if fear of fraud, theft, or criminal misuse overshadows the potential benefits. Regulation that prioritises financial safety protects consumers and strengthens trust in the financial system, trust that is fundamental for adoption at scale.

Regulatory Momentum: Kenya and Ghana Take a Stand

Recognising these risks, several African countries have moved beyond debate and taken decisive action.

Two of the most important developments in the last year came from Kenya and Ghana, where comprehensive regulatory frameworks for digital assets were enacted.

At a time when many developed markets are still struggling to reconcile innovation with enforcement, African regulators are proving that clarity is possible. These frameworks are not reactionary. They are deliberate, consultative, and built for long-term market health.

In Kenya, a new digital asset regulatory framework was formalised in November 2025, the Virtual Asset Service Providers Bill.

This made the East African country one of the first in the region to clearly define licensing requirements, compliance expectations and supervisory oversight for Virtual Asset Service Providers (VASPs).

This law was crafted, with major input and consultation from Yellow Card’s team, enabling innovation while ensuring that operators implement strong AML and CTF safeguards.

Similarly, Ghana’s Virtual Asset Service Providers Bill, 2025, which received president assent at the end of December 2025 marked a historic shift. For years, the digital asset market in Ghana had operated in a gray area – widely used by the public but lacking legal certainty.

With the passage of the VASP Bill and receipt of presidential assent, cryptocurrency activities are now formally legalised and regulated.

This framework assigns responsibility to multiple agencies – including the central bank, securities regulator, and financial intelligence unit – to monitor transactions, enforce identity verification, and prevent illicit flows.

These laws are about more than legitimacy; they are about protecting individuals, businesses, and the broader financial system from abuse.

Why Regulation Matters: Financial Safety and Security Aren’t Optional

Financial crime isn’t just a compliance checkbox for multinational corporations – it’s a real threat that affects individuals, firms and economies.

Losses from fraud and money laundering erode consumer confidence and divert capital away from productive use. Illegal activity distorts markets and can undermine the foundational trust people place in financial systems. In the digital asset context, unregulated exchanges and opaque operations amplify these risks.

Regulatory frameworks like those in Kenya and Ghana create what we call a “safe zone” – a space where innovation can thrive under clear standards that protect participants. Mandatory Know-Your-Customer (KYC) requirements ensure identities are verified. AML and CFT protocols detect and deter illicit flows. And coordinated oversight enables regulators and operators to combine on-chain analytics with traditional compliance tools to identify suspicious behaviour in real time.

A Global Operator’s Perspective: Yellow Card’s Commitment to Safety

At Yellow Card, our operations span across 34 markets, with a footprint in 20 African countries and strategic business relationships spanning Europe and the United States.

This global reach means we interact with some of the most sophisticated regulatory regimes in the world. We don’t see financial safety and security as optional luxuries,  they are prerequisites for operating responsibly at scale.

We have built risk and financial crime programmes that adhere to the highest standards. That includes robust identity verification, transaction monitoring, and real-time risk scoring.

These systems are not theoretical; they are deployed daily to protect users and reinforce trust in the digital economy.

The Future Depends on Safe, Secure, Accountable Markets

As digital assets continue to integrate with traditional finance and everyday commerce, the stakes for financial integrity will only rise.

Countries that lead with thoughtful regulation – rooted in transparency, enforcement and international cooperation – will unlock broader economic potential.

Those that delay risk stagnating in uncertainty. The real question for policymakers is no longer whether to regulate digital assets, but how quickly and how well.

Clear rules today prevent crises tomorrow. In a global market where capital moves instantly, jurisdictions that move decisively will define the future of digital finance.

Regulation that confronts financial crime head-on doesn’t stifle innovation – it enables it by eliminating fear and establishing a foundation of trust. For Ghana, Kenya, and other forward-thinking nations, the message is clear: the future of finance must be safe to be sustainable.

And when safety is non-negotiable, everyone benefits: consumers, businesses, and the economy at large.

This directive comes under the recently enacted Nigeria Tax Administration Act, 2025 and the Nigeria Tax Act, 2025, aimed at enhancing regulatory oversight and closing existing gaps in the financial system.

Key Provisions & What’s New

• Who it applies to: All individuals and entities engaging in economic activity, including those exploiting intellectual or tangible property for income, regardless of their residential status in Nigeria. That means both traditional banking customers and users or providers of virtual asset services (e.g. crypto exchanges, custodial platforms) are affected.
• Required details: At minimum, the customer’s name, NIN, Tax ID, phone number, address, and email. For VASPs, information on the type, date, and value of virtual asset transactions must also be submitted on a monthly basis.
• Reporting thresholds: Financial institutions must report quarterly to tax authorities.
  • For individuals: where cumulative monthly transactions exceed ₦25 million
  • For corporate customers: where cumulative monthly transactions exceed ₦100 million.

Enforcement & Penalties

• Non-compliance by VASPs could incur a ₦10 million fine, plus ₦1 million for every subsequent month of continued non-compliance. In extreme cases, the Securities and Exchange Commission (SEC) may revoke licenses.

Why This Matters

• Improved Compliance & Tax Revenue: With estimated leakages running into hundreds of billions yearly, tighter KYC/ID norms and mandatory Tax IDs are expected to bring those currently outside the formal tax net into compliance.
• Curbing Illicit Finance: The requirement for identification for virtual asset transactions is a response to rising concerns over money laundering, fraud and untracked capital flows in the crypto space.
• Consumer Protection: By enforcing regulatory oversight, authorities aim to shield consumers from fraudulent schemes while ensuring transparency in financial and digital assets services.

Challenges Ahead

• Implementation Readiness: Many Nigerians currently lack an NIN or Tax ID, or struggle to retrieve them. The government will need strong mobilization and public awareness programmes.
• Infrastructure & Data Protection: Ensuring that data collected is securely stored and used responsibly will be crucial to prevent identity theft, breaches, or misuse.

The move reinforces the Federal Government’s commitment to strengthening its regulatory framework, especially as digital finance and virtual assets become more mainstream in Nigeria’s economy.

Stakeholders have been urged to begin preparations to meet these requirements ahead of the January deadline.