In a decisive move to strengthen oversight of Nigeria’s fast-growing digital asset market, President Bola Ahmed Tinubu established the Virtual Asset Regulatory Council (VARC) and designated the Central Bank of Nigeria (CBN) and the Nigeria Revenue Service (NRS) as the country’s joint Virtual Asset Regulatory Authority (VARA), overseeing non-security virtual assets.

The VARC, established through a Presidential Directive issued in August 2025, also recognizes the Securities and Exchange Commission (SEC) as the regulator of virtual assets classified as securities.

The new supervisory arrangement, unveiled as part of a broader policy framework, is designed to reshape how Nigerians interact with cryptocurrencies, stablecoins, digital tokens, and other virtual assets, while enhancing security, transparency, and consumer protection in the sector.

Under the framework, according to a White Paper issued in December 2025, VARA will not operate as a standalone regulator but as a coordinating architecture that harmonises the mandates of existing agencies already involved in aspects of virtual asset oversight.

At the heart of the new structure is the Virtual Asset Regulatory Council (VARC), which will serve as the strategic coordination body.

It will be co-chaired by the Governor of the Central Bank of Nigeria and the Executive Chairman of the Nigeria Revenue Service, with representation from other relevant regulatory and enforcement agencies.

The framework also establishes a Virtual Asset Regulatory Office (VARO) to handle operational coordination and supervision, particularly for non-security virtual assets.

In addition, agency-based Virtual Asset Regulatory Teams will function within stakeholder institutions, supervising virtual asset activities within their respective statutory mandates.

Government sources say the arrangement is deliberately structured to prevent duplication of roles and eliminate silo operations among agencies such as the CBN, NRS, SEC, and the Nigerian Financial Intelligence Unit (NFIU).

A key feature of the framework is a clear distinction between security and non-security virtual assets.

VARA will focus exclusively on non-security virtual assets, including currency-pegged stablecoins, payment tokens, tokenized deposits, and related services such as issuance, custody, payment processing, banking services, and exchange operations.

Virtual assets classified as securities will remain under the regulatory purview of the SEC, ensuring continuity in capital market oversight.

Officials familiar with the framework say this delineation is intended to provide regulatory clarity and reduce uncertainty for operators and investors.

The move comes against the backdrop of Nigeria’s rapidly expanding virtual asset market.

Between July 2024 and June 2025 alone, Nigerians conducted virtual asset transactions estimated at $92.1 billion in the formal market, excluding peer-to-peer and over-the-counter transactions.

Analysts say the scale of activity underscores the urgency of creating robust safeguards to protect users, prevent financial crimes such as money laundering and terrorism financing, and formalise a sector that has operated largely in fragmented regulatory spaces.

Under the new regime, operators, whether local exchanges or offshore platforms serving Nigerian users, will be required to register, meet baseline standards on client asset protection, Know-Your-Customer (KYC) compliance and cybersecurity, and adhere to ongoing reporting obligations.

In return, compliant firms will gain formal recognition, improved access to banking services, and eligibility for regulated partnerships.

A Virtual Asset Sandbox will also allow firms to operate under supervised conditions while licensing rules are phased in.

Notably, the Federal Government has opted not to introduce immediate new legislation; instead, it is empowering existing regulators to act within their current statutory frameworks while the system evolves.

Policy documents indicate that the approach is influenced by international best practices, including the model adopted by the Dubai Virtual Assets Regulatory Authority, which was established in 2022 as an independent regulator for virtual assets in Dubai.

While Nigeria’s VARA differs in structure, functioning as a coordinated supervisory arrangement rather than a single new agency, officials say the framework is designed to be adaptive, innovation-friendly, and globally aligned.

At launch, officials describe the new arrangement as Africa’s first operational coordinated regulatory framework dedicated to virtual assets.

Industry watchers, however, say the true test will lie in implementation: whether the framework accelerates innovation and investor confidence or becomes an additional layer of bureaucracy in an already complex regulatory environment.

For the Tinubu administration, the initiative forms part of a broader push to deepen Nigeria’s digital economy and advance its ambition of building a $1 trillion economy by 2030.

With one of the largest crypto adoption rates in Africa, Nigeria’s bet on coordinated oversight may well determine whether virtual assets become a catalyst for growth or a regulatory challenge in need of further reform. (The Nation)

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