Nigeria is amongst the countries with the highest number of cryptocurrency exchanges currently in existence. With the introduction of bitcoin comes opportunities for both Nigerians at home, abroad and, of course, foreign investors.
Every government with a struggling economy like Nigeria is plugging into the opportunities of the acceptance of bitcoin. Hence the question, is Bitcoin legal in Nigeria?
Nigerian Government Standpoint on Bitcoin
There are no restrictions or any official ban passed into law by the federal government of Nigeria in regards to the trading of bitcoin in Nigeria.
The government, however, has not classified bitcoin either as a commodity or a currency.
With the classification of bitcoin being a commodity or currency, this will mean more development and participation in the trade of bitcoin by Nigerians.
Security Exchange Commission (SEC), however, warns the general public to be careful when making investments or dealings in bitcoins. But there is no regulation from the SEC or any government financial body on the legality or illegality of bitcoin.
In addition, Nigeria authorities are working towards adopting blockchain and coming up with ways to regulate or control scams that are usually associated with bitcoin.
The Central Bank of Nigeria (CBN) passed a circular informing all Nigerian banks and financial institutions that transactions in bitcoin and other virtual currencies are banned in Nigeria.
This circular was passed on the 17th of January 2017. But this does not prohibit the use of bitcoin in Nigeria.
What it simply means is that the regulation prohibits Nigeria banks and financial institutions from transacting bitcoin and being a virtual currency exchange.
The CBN hasn’t issued a general guideline in regards to the trading of bitcoin in Nigeria for the general public.
Tax Laws on Bitcoin and Other Crypto
Bitcoin is classified in some countries as a commodity, barter, security, asset, etc.
In Nigeria, there has been no official statement from any of the financial regulators on the classification of bitcoin.
The classification of bitcoin will determine how it can be taxed. This will enable the tax authorities to come up with regulations tailored to the taxation of bitcoin.
The bright side of this is that in Nigeria, you are not required to pay tax from profits made trading bitcoin.
How to Buy Bitcoin in Nigeria Legally
In other to trade bitcoin in Nigeria legally, you have to create a free account with an exchange that accepts Nigerians.
The procedure for account creation is usually very simple and straight forward with all exchange.
- Sign up with any of the exchanges. Naira2USD, Paxful or Localbitcoin, etc.
- You will be required to enter your email and select at least 8-character password and fill in your full details.
- Next step is to log in to your email and then click on the confirmation email from the exchange to confirm your account.
- After successful registration, you can now buy bitcoin using any of the payment processors available either via any Nigerian bank or Visa/Master card.
If you wish to buy a higher amount you will need to upload a valid government-issued ID and utility bill in other to increase your account limit.
Suggested Reading: How to Trade Bitcoin in Nigeria Successfully –Full Guide
How to Sell Bitcoin in Nigeria Legally
Selling of bitcoin is as easy as buying on most platforms. The procedure also depends on your exchange.
In other to withdraw your BTC to naira, follow these 3 steps:
- Login to your account and on your dashboard, select ‘Sell/Withdraw BTC’.
- Enter the amount of BTC you want to sell, then click on proceed.
- The money will be deposited into your Nigerian bank account within a few minutes to hours, depending on the exchange payment policy.
Where to Buy and Sell Bitcoin in Nigeria Legally
There are more than a dozen available options for buying and selling BTC in Nigeria. They differ and each has its advantages and rates, compared to the competition.
In the following section, I will be reviewing Luno, Naira2Usd, LocalBitcoins, Paxful, NairaEx, and Bitcoin ATM.
1. Luno Exchange
Luno offers its service in Nigeria and various countries. The company was established in 2013 and it is based in London. Its services include trading and storing bitcoin and ethereum.
If you only want to use Luno as a wallet, it is enough to register with a valid e-mail address.
In case you want to buy or sell BTC, you need to pass identity verification.
There are three account tiers available on Luno. The first level requires just some personal details and a phone number, but it will only allow you to trade up to NGN200,000 in total. Uploading any government-issued ID or International passport and a proof of address will raise your limits to NGN10,000,000 per month.
The platform’s safety features include two-factor authentication, using SSL and PGP encryption as well as storing the majority of funds offline.
Accepted payment methods include credit card and bank deposit in NGN. Various deposit and withdrawal fees also apply.
This e-currency exchange is based in Onitsha, Anambra state but this fairly secure platform serves the entire world. It supports several crypto coins, included but not limited to bitcoin only.
When it comes to methods for paying, you can use bank transfer.
The registration process requires you to enter your phone number, but there is no two-factor authentication. There is a $1,000 restriction per trade if you use an unverified account. Sending Naira2USD a government-issued ID and proof of address will remove this limit.
They earn their profit through exchange rates, so it might be a good idea to compare them with other platforms before processing your order.
LocalBitcoins is a European-based company that was founded in Finland, 2012. The idea of the service is to provide users with a maximum level of privacy. You can use LocalBitcoins to find buyers or sellers nearby your location in Nigeria.
The platform has an escrow system, which allows you to confirm transactions and or cancel if buyer or seller do not meet the terms. Your ID is not required in other to trade big volumes on LocalBitcoin.
Bitcoin is the only supported cryptocurrency on LocalBitcoins. However, the website offers more than a dozen payment options. The most popular ones in Nigeria include national bank transfer, but you can also choose cash deposit, PayPal, or Skrill.
The platforms accept NGN and charge a 1% fee to the person who posted the advertisement.
Although the website offers a fast and safe method to buy BTC, be careful of possible scams. Our advice is to carefully analyse the profile of the user you want to purchase from.
Paxful is a platform for direct peer-to-peer trading between two traders.
The crucial reason for their extreme popularity is that they offer more than 300 payment methods which are however dependent on one’s location.
When it comes to Nigeria, the most popular method is the national bank transfer, but you can also use MoneyGram, Western Union, and others.
Some of these might require ID verification, while others let you remain anonymous.
The accepted crypto is bitcoin, and the purchasing process is a piece of cake. You select the offer that suits your needs. Each trader will publish their rate along with the minimum and maximum amount and accepted methods of payment.
Paxful accepts naira and other fiat currencies and only the seller pays a 1% trade fee.
The escrow system is in place to keep security at a high level. It is still on you to choose the trader you want to do business with, and you need to rely on the trader’s reputation and feedback history.
NairaEx started operating in 2015, and it did not take long to position themselves as one of the most trustworthy crypto exchanges in Nigeria.
Only verified users are allowed to buy and sell on the platform and the sellers even have to provide their bank information. If you are a buyer, sending them a copy of your ID card, passport, or voter’s card will be enough.
You can place an order by using the simple NairaEx interface. Select “Buy Orders” and create one with the amount of Naira or BTC you want to purchase. Then you are required to send the payment to the company from your account in one of about 20 Nigeria-based banks. The platform supports bitcoin, ethereum, litecoin, bitcoin cash, and perfect money.
Once you do that, send them proof along with the reference ID, and you should have your crypto delivered in less than 12 hours.