By Bright Anyanwu
Nigeria currently stands at a pivotal economic crossroads. As the federal government actively pursues an ambitious $1 trillion economy, the digital landscape has transitioned from a mere peripheral experiment into a foundational pillar of national resilience.
Between July 2024 and June 2025, Nigerians transacted an estimated $92.1 billion. This massive volume was primarily driven by a growing B2B sector leveraging Stablecoins for cross-border payments, representing a staggering 52% year-on-year increase.
Virtual assets are no longer a “niche” trend; they have become a structural alternative in Nigeria. When traditional financial systems experience cash scarcity or restricted access to foreign exchange, virtual asset rails frequently serve as the default infrastructure for speed and reliability.
However, this rapid adoption has historically occurred outside the formal regulatory perimeter, creating a “visibility gap” that exposed both consumers and the broader economy to unmitigated risks.
The Virtual Asset Regulatory Authority (VARA) White Paper, endorsed by President Bola Ahmed Tinubu in December 2025, effectively marks the end of this era of ambiguity.
Aligning with Global Benchmarks
Nigeria’s new framework aligns seamlessly with an emerging international consensus that prioritises economic function over institutional labels. The strategy attempts to align Nigeria with global comparators while actively resolving local nuances, such as inter-agency friction.
European Union: Employs MiCA (2023), requiring firms to be recognised on a single register to legally access financial rails.
Singapore: Utilises the Payment Services Act (2019), making recognition the mandatory gateway to institutional partnerships.
United Arab Emirates: Relies on VARA Dubai (2025) for activity-based licensing that balances high-growth innovation with investor protection.
Nigeria: Introduces the VARA Framework (2025), leveraging “Distributed Supervision” to coordinate oversight across agencies like the CBN and NRS via a shared Supervisory Telemetry Fabric.
Key Innovations of the VARA Framework
The framework moves Nigeria away from a prohibition stance toward a model where recognition grants legitimacy, access to banking, and regulated partnerships. Key innovations include:
Supervisory Structure: It creates a multi-agency coordinating body rather than a stand-alone regulator. This integrates the CBN, NRS, and other agencies into a Distributed Supervision model to ensure unified oversight while preserving existing mandates.
Strategic Governance: The Virtual Asset Regulatory Council (VARC) serves as the strategic body. It is co-chaired by the Governor of the CBN and the Executive Chairman of the NRS to ensure high-level coordination.
Operational Interface: The Virtual Asset Regulatory Office (VARO) acts as the centralised operational “front door” and secretariat. It manages case allocation and harmonises reporting across regulatory authorities.
Technological Backbone: The framework relies on a secure, shared digital infrastructure linking operators to regulatory authorities. This enables a “Report Once, Share Many” functionality, delivering consistent, real-time data to all relevant agencies simultaneously.
Innovation Gateway: A Virtual Asset Sandbox is introduced as a controlled testing environment for authorised activity. This allows operators to trial products under live supervision to prevent regulatory delays.
Regulatory Philosophy: The regime adopts Activity-Based Supervision, meaning obligations depend on the function performed rather than the institutional label.
Addressing the Grey Areas
While the framework is comprehensive, certain jurisdictional grey areas remain.
The VARA whitepaper dictates that Virtual Asset Service Providers (VASPs) handling non-security tokens must register with the CBN, while those issuing or trading security tokens must register with the SEC.
However, the Investment and Securities Act 2025 grants the SEC the legal mandate as the sole authorised regulator for all virtual assets in Nigeria.
Furthermore, while VARO is positioned as the operational arm meant to receive information from reporting entities, this raises questions regarding anti-money laundering reporting.
The Financial Intelligence Unit Protocol explicitly prohibits any intermediary between Reporting Entities and the FIU for the rendition of Suspicious Activity Reports (SAR) or Suspicious Transaction Reports (STR). Resolving these overlapping mandates will be crucial for smooth implementation.
Conclusion: Licensing; A Precursor to Fiscal Growth
The VARA framework presents a unique opportunity to resolve procedural bottlenecks and ensure the regulatory environment keeps pace with market innovations, complementing existing efforts by the SEC.
As the government aims to boost national revenue via the Nigeria Tax Administration Act 2025, a robust licensing and empowerment framework serves as the ideal precursor to a comprehensive tax regime.
Rooted in the Social Contract Theory, taxation is most effective when it exists within a reciprocal arrangement where the government provides a clear legal environment and supporting infrastructure.
By transitioning from varied oversight to a unified, innovation-ready regime, Nigeria is not just regulating virtual assets—it is future-proofing its digital sovereignty.
Bright Anyanwu (Senior Compliance Manager, and MLRO, West, Central & East Africa, Yellow Card Inc)