LAGOS, March 2, 2026. On Friday at a public townhall in Lagos, Nigerian startup founders and technologists were delivered a pointed message: the era of building in regulatory grey zones is over, and companies that continue to avoid government engagement risk inviting the kind of sudden, sweeping crackdowns that wiped out more than half of Nigeria's crypto startup ecosystem just five years ago.

The warning came at the second edition of the Zikoko Citizen Townhall, held February 28 at Four Points by Sheraton in Lagos. Organised by Zikoko Citizen in partnership with Luminate and the Open Society Foundation, the event centred on the theme "Who Shapes the Nigerian Life?" A panel specifically focused on the intersection of technology entrepreneurship and government regulation (titled "Innovation under pressure: How politics shapes what can be built in Nigeria") drew particular attention, with speakers urging builders to treat regulator engagement as a core business strategy rather than an optional compliance exercise.

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"They See Displacement, Not Disruption"

The panel's sharpest framing came from Oswald Osaretin Guobadia, Managing Partner at DigitA, who argued that Nigerian authorities have consistently misread technological change. "The government doesn't understand disruption; they see displacement," Guobadia said, suggesting that officials interpret new platforms and financial tools primarily as threats to existing economic structures and jobs, rather than as sources of growth. That misreading, panellists argued, is precisely why proactive engagement matters: if builders are not in the room explaining what their products do, the default interpretation tends toward the hostile.

The cautionary backdrop is the 2021 Central Bank of Nigeria (CBN) directive that effectively banned commercial banks from servicing crypto businesses. Of 42 local and Africa-focused crypto startups operating in Nigeria at the time, 26 (over 60%) shut down, were acquired, or changed course entirely within two years. Platforms including Naijacrypto, NairaEx, and Lazerpay ceased operations; Lazerpay cited "an uncertain regulatory framework around crypto in Nigeria" in its shutdown announcement. That risk has since been dramatised at a far larger scale: in February 2025, Nigeria filed an $80 billion lawsuit against Binance, and the near-year-long detention in 2024 of Tigran Gambaryan, Binance's Head of Financial Crime Compliance, drew sustained international attention, compounded by his November 2025 allegations of a $50 million extortion demand. Together, the cases represent the most high-profile recent illustration of the regulatory exposure the panel was urging builders to take seriously.

In retrospective accounts published in a February 2025 TechCabal investigation into the lasting impact of the 2021 ban, founders described damage that extended well beyond the immediate wave of closures. Franklin Peters, founder of Bitfxt, which later pivoted to become Boundlesspay, drew a direct lesson: "Crypto companies cannot overlook compliance again. We know 15,000+ users." Ben Eluan, founder of iFlux, described the reputational spillover more bluntly: "Nobody wants to work with you anymore if you deal with crypto."

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A New Regulatory Landscape, and Its Complications

The 2021 ban was officially lifted in December 2023, and Nigeria has since moved toward a more structured framework. The Investment and Securities Act (ISA) 2025, signed by President Tinubu in March 2025, marks the first time Nigerian law formally recognises digital assets (cryptocurrencies, stablecoins, NFTs, security tokens, and central bank digital currencies) as securities subject to oversight by the Securities and Exchange Commission (SEC). Licensing is now required for exchanges, wallet providers, custodians, and investment advisers. SEC Nigeria has so far issued provisional licences to two crypto exchanges, Busha and Quidax (ahead of the full ISA 2025 framework coming into force), giving early compliant operators a significant first-mover advantage.

The CBN separately released a Fintech Policy Insight Report on February 2, 2026. The document emerged from a June 2025 stakeholder workshop and an October 2025 Fintech Roundtable, demonstrating that the regulator has already shown appetite for the kind of consultative engagement the panel was calling for. It proposes a Standing Fintech Engagement Forum modelled on the existing Bankers' Committee, along with a single regulatory window to coordinate licensing across five agencies and a shared compliance platform to eliminate duplicate reporting. The report, however, explicitly warns of a "high risk that implementation efforts could stall" without a dedicated internal secretariat.

The picture is complicated by newer legislation. Nigeria's Digital Economy Bill and AI Bill, both passed in 2025, grant the National Information Technology Development Agency (NITDA) authority over artificial intelligence, cloud services, and digital public infrastructure, creating overlap with the CBN, SEC, NCC, and NDPC, among other regulators. For fintech and crypto products, that overlap is not peripheral: the NCC governs the telecoms infrastructure many payment services depend on, while the NDPC sets the data protection requirements that underpin user onboarding and KYC flows. The AI Bill's requirement that anyone "developing, importing, distributing, or using AI" must register has been widely described as particularly contentious among startups.

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Capital Is Leaving

The regulatory environment is registering in investment data. Nigeria accounted for more than 33% of venture capital flowing into Africa's four largest tech markets in 2021; by 2025, that share had fallen to approximately 8%. Eight of the ten African startup shutdowns recorded in 2025 were Nigeria-based companies. The Nigeria Tax Act 2025 added further pressure, raising corporate capital gains tax overnight from a flat 10% to 30%, and introducing an "economic nexus" provision that can subject offshore share sales to Nigerian taxation if more than half of a company's asset value derives from Nigerian holdings in the preceding 365 days. That lookback window means restructuring decisions made now directly affect the taxability of exits later this year. As of February 2026, zero listings on the NGX Technology Board have occurred, effectively eliminating the IPO pathway as a viable exit option and compounding the pressure on VC-backed founders. Segun Cole, CEO of Maasai VC, was direct about the consequence: "Moving from 10% to 30% CGT overnight changes the Internal Rate of Return for every VC fund in the market."

Despite these headwinds, Nigeria remains the continent's largest crypto market by adoption metrics, processing approximately $59 billion in crypto transaction value in the twelve months to June 2024, and accounting for roughly 40% of sub-Saharan Africa's stablecoin flows.

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The Practical Prescription

For builders navigating this environment, the Townhall panel's message translated into concrete strategy: participate in Nigeria's expanded CBN regulatory sandbox, which now covers AI, cross-border payments, and embedded finance; diversify across markets rather than concentrating in Nigeria alone (Yellow Card's expansion to 20 countries after 2021 is the template the industry now points to as a model for building regulatory resilience); and treat early licensing not as a compliance cost but as a competitive moat.

A separate Citizen Report launched at the event found that misinformation has discouraged more than 60% of young Nigerians from political participation, a figure panellists framed as both a civic concern and a strategic problem for an industry whose future depends on a generation that is under 35 and makes up 70% of Nigeria's population.

The regulatory frameworks being written now, speakers concluded, will govern the next decade of Nigerian tech. The question is whether builders help shape them, or discover too late what happens when they don't.

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Sources: TechCabal, Semafor, Andersen Nigeria, EY Nigeria, Ecofin Agency, Zikoko Citizen, CBN Fintech Policy Insight Report (February 2026), Fintech News Africa, Technext24, CoinDesk, ICLG Nigeria, African Business, Techpoint Africa, Launch Base Africa, Cryptoverse Lawyers