- By Professor Wahab Elias and Oluwole Ololade Adeosun
…Delisting from the FATF grey list is progress; building trust in digital finance will be the real reform.
…Delisting is progress — but trust is the real reform
Getting off the Financial Action Task Force (FATF) Grey List is a genuine reform success. It deserves recognition: greylisting raised the cost of doing business, discouraged investment and signalled governance weakness. FATF’s decision to remove Nigeria from enhanced monitoring restores credibility — but it is a fragile victory. The harder work lies ahead.
Crypto and digital-asset oversight now sit at the heart of that challenge. Although FATF’s Recommendation 15 on virtual assets was not one of the reasons Nigeria was greylisted, it became central to the country’s exit commitments.
Nigeria’s experiment with crypto regulation has been episodic, fragmented and dominated by a security lens. To consolidate reform momentum, digital finance must be treated not as a compliance afterthought but as a test of financial sovereignty.
From tolerance to ‘shadow regulation’
Between 2017 and 2020, the Central Bank of Nigeria (CBN) tolerated crypto informally while the Securities and Exchange Commission (SEC) studied its classification. Then in 2021, the CBN abruptly prohibited banks from servicing exchanges — launching what became known as “shadow regulation.”
A year later, the SEC released its first digital-asset guidelines and promised a sandbox regime, but no firm has yet graduated from that experiment. By 2023 the banking ban was partially lifted, though without new licences.
Today, three institutions dominate the field: the CBN, the Federal Inland Revenue Service (FIRS) and the Office of the National Security Adviser (ONSA). The SEC retains the statutory title of regulator under the Investments and Securities Act 2025, but not the operational weight to make it meaningful.
From a sociological standpoint, this regulatory oscillation reflects a familiar pattern — where authority is personalised and discretion replaces discipline when formal systems are weak. From a market-governance perspective, fragmentation erodes both compliance and confidence, deterring long-term capital.
Trust deficit and policy reversals
Since 2021, Nigeria has governed crypto through circulars, bans and quiet reversals. Banks were told to block exchanges, then told to unblock them.
Telcos restricted unlicensed platforms; users countered with VPNs and offshore brokers. The approach bought time but undermined trust, pushing activity off-grid and out of reach.
The result has been more volatility, capital flight and uncertainty about whether Nigeria is open for innovation or still improvising.
The rise of unregulated P2P networks
The most dangerous outcome is the explosion of peer-to-peer (P2P) trading. What began as a technical workaround has become the main rail for illicit finance. FATF classifies such unhosted transactions as the highest-risk corridor for money-laundering, terrorism funding and election-season slush funds.
Thousands of brokers now operate through messaging apps, settling via informal bank transfers or gift-card swaps. The mix of anonymity, speed and zero oversight attracts both speculators and bad actors.
Unless policy shifts before the 2027 elections, these networks could become the preferred channel for dark finance. Reducing their appeal is not censorship — it is financial hygiene. The solution is simple: make the regulated path cheaper, faster and safer than the unregulated one.
ARRIP: The sandbox that stalled
The Approval-in-Principle regime (ARRIP) was created to close that gap — a sandbox for innovation under supervision. In practice, it has become a holding pattern. The SEC manages it in name but lacks the resources to enforce timelines or graduate participants.
Meanwhile, the CBN is preparing to launch a Digital Finance Supervision Unit next year, linking bank rails, tax reporting and prudential oversight. From an accounting-governance perspective, this could be the bridge between innovation and accountability.
If successful, it could turn ARRIP from fiction into framework. If not, it will confirm that Nigeria can draft regulations faster than it can implement them.
Lessons from the region
South Africa’s formal registration of crypto service providers has built credibility. Kenya’s early permissiveness followed by crackdown created instability. Ghana’s cautious diplomacy built trust but slowed clarity.
Nigeria risks combining the worst of all three: costs without credibility, restrictions without stability.
What must change
The path forward requires discipline, not invention.
1. Coordinate rather than compete: the CBN, FIRS and ONSA must work together.
2. Be transparent, not transactional: backroom directives undermine both compliance and confidence.
3. Focus on substance, not slogans: build rails for lawful digital finance while closing those that invite abuse.
The public does not need another acronym. It needs a framework that works.
The next frontier: Trust
Nigeria’s fintech users are ingenious, but resilience is not the same as trust. Without credible oversight, innovation migrates offshore, capital flees and the naira suffers.
FATF delisting has bought Nigeria time, but not immunity. The real test is whether the country can construct a regulatory architecture that is both innovative and enforceable — one that curbs illicit flows before politics weaponises them.
As both sociologist and market professional, we see the next frontier not in drafting new rules but in strengthening the institutions and trust that make rules meaningful.
Beyond greylisting lies a harder task: ensuring that digital finance serves Nigerians — not the shadows.
Professor Wahab Elias is a Professor of Sociology at Lagos State University (LASU). His research focuses on institutions, governance and social change, particularly how regulatory systems adapt to technological and economic transitions.
Mr. Oluwole Ololade Adeosun, FCS, FCA, is Managing Director and Chief Executive Officer of Chartwell Securities Limited. He is the 12th President of the Chartered Institute of Stockbrokers and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN).
