Business - July 22, 2025

Why Does Nigeria See Bitcoin as a Security?

Oluwadamilola Olanrewaju July 22, 2025

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Bitcoin has always been hard to define. Some say it’s money. Others say it’s more like gold. But in Nigeria, the government sees it as something else entirely, a security.

That might sound strange, especially since only one other country in the world, Malaysia, treats Bitcoin this way. So, why is Nigeria taking this unusual route?

A Quick Look at What a Security Means

A “security” is usually a financial product like stocks or bonds—something people invest in, hoping it will grow in value. When you buy shares in a company, you expect that company to do well so your shares will be worth more. That’s a typical example of a security.

In 2020, Nigeria’s Securities and Exchange Commission (SEC) decided that Bitcoin and other cryptocurrencies should be treated as securities. That decision became law in the 2025 Investment and Securities Act.

What does this mean? It means Bitcoin and other digital assets fall under the same rules that guide the buying and selling of company shares. Exchanges and crypto businesses have to register with the SEC, follow strict rules, and make their operations more transparent.

But Is Bitcoin Really a Security?

This is where the debate starts.

In countries like the U.S., whether something is a security is usually tested with something called the Howey Test. According to this test, if people invest money into something expecting a profit that comes mostly from someone else’s effort (like a company or team), then it’s a security.

Bitcoin doesn’t really fit this mold. There’s no company behind it. There’s no CEO. It wasn’t launched to raise funds. And its value isn’t driven by a single group—it’s driven by demand and supply in the global market.

That’s why many other countries—like the U.S. (at least for now), Canada, and the EU—see Bitcoin more as a commodity, like gold or oil.

So why is Nigeria going against the grain?

Nigeria’s Reasoning

According to Nigerian regulators, the way Bitcoin is being used in the country justifies this decision. People in Nigeria don’t treat Bitcoin like everyday money—they treat it more like an investment. And because so many Nigerians have lost money in crypto scams, the government wants tighter control to protect the public.

Experts like Tami Koroye say that since Nigeria doesn’t use the Howey Test, its regulators have more freedom to make calls based on local realities. And one of those realities is that people are buying Bitcoin with the hope of making profit, not using it to buy bread or fuel.

So, the Nigerian SEC decided to play it safe: treat all digital assets as securities—unless proven otherwise.

What Makes Bitcoin Different?

Bitcoin is not like most other cryptocurrencies. It wasn’t created by a company. It didn’t launch through a fundraising campaign. And it’s not managed by a team that can be held accountable.

This has led some industry leaders to argue that Bitcoin shouldn’t be treated the same way as tokens like Ethereum, Chainlink, or others. In fact, many global regulators think of Bitcoin as a kind of digital commodity—a scarce, valuable item people trade.

But Nigeria has taken a “one size fits all” approach, and this may have consequences.

The Impact of This Decision

By treating Bitcoin as a security, Nigerian startups working with crypto now have to follow the same tough rules as big finance companies. This could slow down innovation, push smaller businesses out, and confuse people about how to pay taxes on Bitcoin trades.

Is it income tax? VAT? Capital gains tax? No one is really sure. And that uncertainty isn’t good for investors or regulators.

Some experts, like Ayotunde Alabi of Luno Nigeria, believe this is just the first step—and that the rules might become more flexible in the future as the crypto market grows.

A Middle Ground?

Some believe Bitcoin shouldn’t be stuck in one box. It acts like money, but it’s also a store of value like gold. In some countries, regulators are already using hybrid models. In Switzerland and Japan, for example, how a digital asset is treated depends on how it’s being used.

Nigeria may need to move in this direction too. A flexible system could allow Bitcoin to be treated as an investment when traded, and as money when used for payments.

Final Thoughts

Nigeria’s decision to treat Bitcoin as a security shows just how tricky it is to regulate new technologies. The goal is to protect users, prevent fraud, and bring order to a fast-moving space. But using a one-size-fits-all approach could also slow down progress and scare off innovation.

Maybe the answer isn’t to decide what Bitcoin is once and for all—but to keep watching how people actually use it, and let the rules grow from there.