Crypto trading is one of the ways many Nigerians earn money online. In fact, Nigeria is one of the countries that have high crypto trading volumes globally. But you may wonder why many Nigerians are involved in crypto trading even when the Central Bank of Nigeria (CBN) in February 2021 issued directives prohibiting financial institutions in the country from transacting with entities dealing in cryptocurrencies. In this article, we’d be letting you know whether crypto trading is legal in Nigeria or not.
Is Crypto Trading Legal in Nigeria?
Yes, crypto trading is legal in Nigeria. Even though the Central Bank of Nigeria has maintained its non-acceptance of cryptocurrencies within the Nigerian financial scene, there is no law criminalizing engaging in crypto trading nor is there any punishment ascribed to the act. The CBN Press Releases wherein are contained directives that prohibit the use of cryptocurrencies in Nigeria do not possess the authority to define what’s a crime and what’s not. Going by the provisions of Section 36 (12) of the 1999 Constitution of the Federal Republic of Nigeria, crypto trading is legal in Nigeria since no enacted law states otherwise.
What is the Position of the Law on Crypto Trading in Nigeria?
Since 2017, Nigeria’s CBN has released several publications stating it does not recognize cryptocurrencies. The latest CBN circular on cryptocurrencies was released to the public in February 2021. In that circular, the apex bank warned Deposit Money Banks and other Non-financial Institutions to desist from transacting in/and with entities dealing in cryptocurrencies.
The question is, does the CBN possess the authority to tag crypto trading as illegal in Nigeria? The answer to that question is simply NO. Although the Central Bank of Nigeria’s concern about the decentralised nature of cryptocurrencies and the anonymity of transactions might make some sense, it does not, however, have the authority to tag crypto trading as illegal in Nigeria.
We base our stance that crypto trading is legal in Nigeria based on the provisions of Section 36 (12) of the 1999 Constitution of the Federal Republic of Nigeria which states:
“Subject as otherwise provided by this Constitution a person shall not be convicted of a criminal offence unless that offence is defined and the penalty, therefore, is prescribed by a written law; and in this subsection, a written law refers to an Act of the National Assembly or a Law of a State, and subsidiary legislation or instrument under the provisions of the law.”
Going by the above quote, since no written law has expressly banned, criminalized, or prohibited crypto trading in Nigeria, we are confident when we tell you that buying and selling cryptocurrency tokens is not an offence.
So you are clear on the position of the law on crypto trading in Nigeria, we’ll reference the ruling in the case of Central Bank of Nigeria v. Rise Vest Technologies & Ors. In the said case, Justice Taiwo O. Taiwo of the Federal High Court, Abuja declared that the CBN’s circular, referenced as BSD/DIR/PUB/LAB/014/001 of February 5, 2021, is not a law and that CBN lacks the requisite authority to declare crypto trading to be illegal by a mere circular.
From the above, we believe that you now know that crypto trading in Nigeria is not a crime. However, since financial institutions are statutorily obligated to comply with CBN’s directives, we’d advise that you do not carry out any transactions relating to crypto trading using your Nigerian bank account.
So, trading cryptocurrency tokens using a legit peer-to-peer crypto exchange platform deals with the restrictions imposed by CBN as your Nigerian account wouldn’t be directly involved with crypto trade. The only exception to this is if the trading of cryptocurrency was to facilitate a crime, say funding terrorism or money laundering.
How to Trade Cryptocurrency in Nigeria
If your hesitation to begin crypto trading was because you were uncertain about its legality in Nigeria, you now know you would not be committing a crime by buying and selling cryptocurrency tokens.
In this section of this piece, we’ll provide you with some salient information to help to trade crypto effectively. But before we proceed, we should let you know that the crypto market is very volatile. With this being said, you should avoid trading crypto with money you can’t afford to lose.
The first step you need to take towards trading crypto is to register on a legit crypto exchange platform such as Binance or Yellow Card. After successfully registering on a legit crypto exchange of your choice, the next line of action would be to build a crypto trading plan. A good trading plan should contain your motives for buying and selling cryptocurrency tokens as well as the amount of money you want to make and the strategy you’d use.
There are several crypto trading strategies that you could opt to use. One strategy is the Day Trading strategy which involves you taking a position within the crypto market and exiting within a day. Another strategy is Arbitrage Trading in which you buy crypto tokens at a low price and then sell when the price is higher. Then there is the Dollar-Cost Averaging strategy which requires that you buy crypto tokens at intervals. Lastly is Scalping, a crypto trading strategy in which you enter and exit a trade quickly to make a profit.
With your chosen strategy, you can go ahead to trade crypto tokens on your chosen legit crypto exchange. You would want to monitor your crypto sales by constantly tracking your trades so you know what’s happening in your crypto wallet. We must, however, remind you that you shouldn’t trade crypto based on hype, but rather on proper research.
Tip on How to Manage the Volatile Nature of the Crypto Market
Considering how volatile the crypto market is, we would like to recommend an important tip to help you not lose money when the crypto market dips. That important tip is to buy stablecoins to preserve the gains of your crypto tokens so that you don’t lose money when the crypto market dips.