PwC Flags Tax, Licensing Risks As Nigeria Retains Crypto Market Lead

Nigeria is expected to retain its position as Sub-Saharan Africa’s largest cryptocurrency market in 2026, driven by sustained demand for alternative financial channels amid foreign exchange constraints, inflationary pressures and growing use of stablecoins, according to PwC’s latest Economic Outlook.

The professional services firm said Nigeria processed more than $92.1bn in crypto transactions between July 2024 and June 2025, nearly three times the value recorded in South Africa, underscoring the country’s scale, youthful digital adoption and persistent macroeconomic challenges that continue to push users toward digital assets.

PwC noted that crypto usage in Nigeria remains largely functional rather than speculative, with stablecoins increasingly serving as a practical store of value and settlement rail in an environment of limited FX access.

Bitcoin also continues to dominate fiat-to-crypto purchases across Sub-Saharan Africa, accounting for about 89 per cent of such transactions in Nigeria, compared with 74 per cent in South Africa, reflecting its role as a default hedge and entry asset in volatile financial conditions.

The report highlighted that stablecoin usage is structurally higher in Nigeria than in peer markets, signalling a growing reliance on crypto rails as informal dollar substitutes and alternative FX channels.

However, PwC cautioned that the data reflects only activity on centralised exchanges and does not capture the full scale of peer-to-peer and informal crypto flows prevalent in the market.

On the demand side, PwC observed that crypto adoption in Nigeria is dominated by young, tech-savvy users, particularly students and self-employed entrepreneurs who use digital assets for flexibility, cross-border transactions and business utility.

Traders and freelancers also account for a significant share of users, while participation among those in formal employment is rising, suggesting increasing mainstream acceptance.

By contrast, adoption among older and unemployed populations remains minimal, reinforcing the youth-centric nature of Nigeria’s crypto ecosystem.

Despite lingering regulatory uncertainty, the firm said Nigeria’s crypto market is positioned for further expansion in 2026, supported by plans to implement a more formal regulatory and tax framework.

However, PwC warned that progress on licensing remains slow, with only two exchanges granted provisional approval so far, highlighting capacity and sequencing challenges within the supervisory framework.

The report raised concerns that the planned rollout of crypto-asset taxation could outpace regulatory readiness. Under the new Tax and Tax Administration Acts set to take effect from 2026, crypto profits will be treated as income and taxed at rates of up to 25 per cent, replacing the previous 10 per cent capital gains tax regime.

PwC said the change would significantly raise the tax burden and complexity for crypto users.

Virtual Asset Service Providers are also expected to face higher compliance, reporting and operational costs in 2026 as regulatory requirements tighten.

While these measures may strengthen oversight of licensed platforms, PwC cautioned that they could also push a larger share of activity into informal or offshore channels if enforcement capacity does not improve.

The firm further noted that crypto markets can be used to circumvent capital controls, particularly through unlicensed exchanges, while stablecoin purchases funded by naira deposits may contribute to liquidity pressures in the banking system.

In response, regulators have strengthened monitoring of crypto inflows and outflows and introduced foreign exchange pricing bands to deter arbitrage, although PwC said market surveillance remains constrained by incomplete data coverage.

Beyond the crypto sector, PwC projected Nigeria’s economy to expand by about 4.3 per cent in 2026, supported by higher crude oil production and stronger performance in key sectors.

Nevertheless, fiscal sustainability risks are expected to persist due to low revenue-to-GDP ratios, fiscal leakages, elevated spending and rising debt service obligations.

Headline inflation is projected to ease moderately in 2026, aided by the Central Bank of Nigeria’s tight monetary policy stance, rebasing effects and improved stability in the foreign exchange market.

The naira is expected to remain broadly stable through the year, underpinned by ongoing CBN reforms and improved portfolio inflows.

PwC concluded that while Nigeria’s crypto market will continue to benefit from macroeconomic pressures and digital adoption, the pace and quality of regulatory implementation will be critical in determining whether growth is channelled through formal, well-supervised platforms or increasingly migrates to informal and offshore networks.