The International Monetary Fund (IMF) has raised red flags over Nigeria’s growing use of crypto assets for cross-border transactions, citing substantial risks to capital flow management, monetary stability, and regulatory effectiveness—especially in emerging markets.
The warning comes amid a staggering rise in the global crypto market, which ballooned from $211 billion in January 2020 to $3.4 trillion by December 2024—a 1,511% surge over five years.
This is according to the IMF’s latest country report on Nigeria, reviewed by Naijaonpoint Research.
Citing Chainalysis’ 2023 Global Crypto Adoption Index, IMF noted that Nigeria ranked among the top three globally, with over $59 billion in crypto transactions between July 2023 and June 2024. A 2024 survey by Consensys and YouGov further showed that 62% of Nigerian crypto users have owned Bitcoin, followed by Binance Coin (51%), Ethereum (41%), Dogecoin, Tether, and Solana.
The IMF observed, “Given the growing volume of crypto asset market activity in Nigeria, a comprehensive policy and regulatory framework is necessary to address the underlying risks.”
To validate the IMF’s concerns, a closer look at Nigeria’s global fraud and security rankings is instructive:
The informal and largely unregulated use of crypto assets in Nigeria has macroeconomic consequences that stretch beyond the crypto ecosystem.
Crypto-based capital flight channels FX inflows outside the formal system. This not only weakens Nigeria’s foreign exchange liquidity but could also contribute to the estimated 90% of dollar inflows that Bureau De Change (BDC) operators allege are unrecorded, according to a report by Naijaonpoint. These flows bypass the official reserves and weaken Nigeria’s FX position.
In addition, crypto usage increases dollar demand in the informal market, fueling speculative demand and naira volatility. This widens the gulf between the official and parallel market rates.
Untaxed gains from crypto transactions represent forgone revenue opportunities. If regulated properly, crypto gains could contribute to GDP through the service sector and be taxed under capital gains tax or withholding tax.
When large volumes of financial activity occur outside regulated channels, the CBN’s grip on inflation, interest rates, and money supply could weaken. This may diminish the impact of capital control measures and complicate liquidity management.
The anonymity of crypto assets makes them attractive for illicit financial flows—ranging from money laundering and tax evasion to terrorism financing—posing risks to Nigeria’s financial credibility and international standing.
Recognizing the urgency, the Securities and Exchange Commission (SEC) under the leadership of Director General, Dr. Emomotimi Agama has been vocal and has taken active steps to regulate the ecosystem. In light of these risks, Nigerian authorities have begun tightening regulatory controls.
The IMF’s advisory to Nigerian authorities outlines a comprehensive 9-element framework comprising 37 actionable steps to mitigate the risks associated with crypto asset activities.