Collaboration Unveiled: Chainalysis Joins Forces with SEC Nigeria for Regulatory Purposes

Regulating the Crypto Space in Nigeria: A Step Towards a Fraud-Resistant Ecosystem

Nigeria, a country with a population of over 220 million, is witnessing a significant shift in its digital asset landscape. According to recent statistics, over 33% of its population is actively engaged in the digital asset space, making it one of the highest adoption rates in Africa.

This rapid growth, however, has not come without challenges. In the past 25 years, Nigerians have reportedly lost an estimated ₦1 trillion to crypto-related Ponzi schemes. To combat this issue, the Securities and Exchange Commission (SEC) Nigeria has taken a proactive approach, introducing the Investment and Securities Act (ISA) 2025 - the country's first upgrade in 18 years.

ISA 2025 lays down essential foundations for the crypto ecosystem, explicitly defining crypto assets within securities law, licensing Virtual Asset Service Providers, and mandating custody and asset segregation standards. This regulatory framework aims to balance innovation with investor protection.

In a bid to further strengthen the regulatory landscape, SEC Nigeria is collaborating with Chainalysis, a leading blockchain analytics firm. This collaboration will leverage blockchain's transparency to fight crypto fraud, with a focus on data intelligence and technical foundations driving transaction transparency.

Abdulrasheed Dan-Abu, Head of Fintech and Innovation at SEC Nigeria, outlined an inclusive collaboration framework needed to tackle crypto risks. This framework involves multiple agencies such as SEC Nigeria, Central Bank of Nigeria (CBN), Nigerian Financial Intelligence Unit (NFIU), Economic and Financial Crimes Commission (EFCC) Nigeria, Nigerian Police Force, Department of State Services, and Office of National Security Adviser.

The EFCC, responsible for implementing punitive measures against Ponzi scheme fraud cases, is utilizing wallet cluster analysis, money flow tracking, and recording all Bitcoin and Ethereum transactions in data-driven investigations. Chainalysis, with its expertise, has identified over 100,000 unique blockchain entities and helped seize $11 billion in criminal assets globally.

The shift in Nigeria signals greater accountability and compliance requirements for crypto businesses, alongside the potential for more sustainable growth in a fraud-resistant environment. For instance, the Commissioner Ajomale, who previously ran an exchange, recognized the importance of innovation in the crypto space. He emphasized the need to trace illicit activity by analyzing wallet clusters, tracking fund flows, and logging all Bitcoin and Ethereum transactions.

The digital-native generation in Nigeria, primarily under 30, is embracing crypto at unprecedented rates. The vision for Nigeria's crypto ecosystem is to enable innovation through trust, regulating to help investors build more trust and distinguish legitimate businesses from potential fraudsters.

This article highlights the ongoing efforts to regulate the crypto space in Nigeria and across Africa, with a focus on combating fraud and promoting a safer and more transparent ecosystem. The recent losses from Ponzi schemes such as the Cybeg saga (where ₦1.3 trillion disappeared earlier this year) underscore the need for these regulatory measures. The SEC's current probe into 79 suspected Ponzi schemes further underscores this commitment to maintaining a secure and trustworthy digital asset market.

Collaboration Unveiled: Chainalysis Joins Forces with SEC Nigeria for Regulatory Purposes