The International Monetary Fund (IMF), in its latest country report on Nigeria, has raised alarm over the country’s booming crypto economy — warning that if left unchecked, it could destabilize Nigeria’s financial architecture, undermine regulatory controls, and punch holes in already strained capital flow management.
The warning comes at a time when Nigeria has become one of the world’s most active crypto markets. According to Chainalysis’ 2023 Global Crypto Adoption Index, Nigeria ranks among the top three globally, with more than $59 billion in crypto transactions recorded between July 2023 and June 2024. A separate poll by Consensys and YouGov found that 62% of Nigerian crypto users had owned Bitcoin, while others invested heavily in Binance Coin, Ethereum, Dogecoin, Tether, and Solana.
This explosion in adoption coincides with a global surge in crypto markets. Since January 2020, the total crypto market value has jumped from $211 billion to $3.4 trillion by the end of 2024 — a meteoric 1,511% rise in just five years. But Nigeria’s case is unique, both in scale and context. With a battered naira, rigid forex controls, and widespread distrust in formal financial institutions, crypto has flourished as both an escape hatch and a workaround.
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But not without consequences.
The IMF’s core concern is that Nigeria’s crypto boom is expanding beyond regulatory reach. A significant portion of capital flows into and out of the country now bypasses traditional banking systems. This undermines the Central Bank’s ability to control liquidity, inflation, and exchange rates. More troubling, a large volume of these transactions go unrecorded, effectively stripping Nigeria of foreign exchange earnings and eroding tax revenue.
Informal crypto activity is also contributing to forex market distortions. As users trade naira for dollars through peer-to-peer platforms, dollar demand in the unofficial market rises, feeding speculative behavior and widening the gulf between the official and black-market rates. According to estimates from Bureau De Change operators, up to 90% of foreign currency inflows into Nigeria are now off the radar — a staggering figure that underscores how much influence crypto now has in shaping Nigeria’s currency dynamics.
Beyond economic instability, Nigeria is facing serious image problems internationally. The country remains on the FATF Grey List — a designation reserved for jurisdictions with strategic deficiencies in combating money laundering and terrorist financing. The situation is worsened by statistics from Sumsub’s 2024 “Fraudlympics,” which placed Nigeria first globally for crypto-related fraud, identity theft, and forced verification scams. In terms of terrorism risks, Nigeria ranked sixth globally in the 2025 Global Terrorism Index.
Faced with these pressures, Nigerian regulators have begun scrambling for a grip.
Under Dr. Emomotimi Agama, the Securities and Exchange Commission (SEC) is leading the charge. In early 2025, the country rolled out its first naira-backed stablecoin, the cNGN, launched through licensed exchanges. By June, the SEC introduced a suite of initiatives including the “Crypto Smart, Nigeria Strong” national awareness campaign, a framework for regulating stablecoins, and licensing guidelines for all virtual asset service providers (VASPs). It now mandates that crypto platforms must register, operate physically within Nigeria, and file regular transaction reports.
In a move to deepen oversight, the SEC has also begun integrating blockchain into its regulatory systems to ensure transparency and data integrity. It’s aligning closely with international watchdogs like the International Organization of Securities Commissions (IOSCO) in a bid to strengthen cross-border enforcement and secure Nigeria’s position in the global financial ecosystem.
Still, the IMF believes more must be done. In its advisory, it outlined a nine-point policy blueprint with 37 specific actions Nigeria must adopt — from defining the legal status of crypto assets and clarifying tax obligations to monitoring the impact of crypto on monetary policy and building resilient, regulated alternatives for cross-border payments.
The informal nature of Nigeria’s crypto economy means large sums are slipping through regulatory cracks. Profits go untaxed. Illicit financial flows remain hard to trace. And capital flight is harder to control. In a country already contending with high inflation, volatile exchange rates, and an economy that’s heavily dollar-dependent, the risks are real — and growing.
However, crypto’s appeal in Nigeria stems from a deeper distrust — in the naira, in banking systems, in government institutions. Nigerians are embracing crypto not just as a financial tool, but as a protest, a shield, and a last resort.
Financial experts have noted that if the Nigerian government hopes to regain control, it must do more than regulate. It must rebuild trust. That means implementing robust reforms and demonstrating a credible commitment to economic transparency.