What is Crypto Trading In Nigeria? How Does it Work?
Cryptocurrency adoption is fast growing in Nigeria and it is said that Nigerian users make up a huge section of the Bitcoin market in Africa. Nigerians are proactive and resourceful. Chainalysis even places Nigeria in the top six around the world when it comes to the crypto adoption index.
So if you are a beginner looking to learn more about cryptocurrency trading in Nigeria, this guide will help you. Read along as we explain how to trade cryptocurrency in Nigeria and if it is legit.
Start trading cryptocurrencies right now with Binance!What is Cryptocurrency Trading in Nigeria?
Before we discuss cryptocurrency in Nigeria and how it works, what exactly is a cryptocurrency?
A cryptocurrency is digital money that is decentralised. It is not managed and maintained by a central authority like the Central Bank. Instead, cryptocurrencies are based on the blockchain and brought into existence with the help of cryptographic techniques that allow such currencies used to be bought, sold, or traded safely and securely.
You can exchange cryptocurrencies for goods and services just like you do with fiat, but they also serve as forms of investments in what is called decentralised finance. As of now, you’ll find over 5,000 cryptocurrencies in existence but the most popular is Bitcoin. In 2023, Bitcoin rose to its highest price above $65,000 but right now is trading below $39,000.
So how does crypto trading work?
Cryptocurrency trading in Nigeria involves exchanging the Naira for other cryptos like Bitcoin, Ethereum, Shiba Inu, Dogecoin, Solana, BNB, etc. Then once the value of your asset rises, you can sell them out for fiat to claim your profit. To engage in trading any cryptocurrency in Nigeria, you'll need to use trusted platforms such as an exchange or crypto broker. These exchanges or brokers give you access to the cryptocurrency markets where you can buy, sell, and trade digital currencies.
Crypto Trading Pros
High volatility means high rewards
Faster transaction times
You can trade the market in either direction, either long or short
More earning opportunities such as staking, farming, and leverage trading
You can either trade daily or invest for the long term
Crypto Trading Cons
Hard to predict the market due to high volatility
No central authority, so you have a higher risk of getting scammed
High volatility can lead to massive losses
Is Crypto Trading Legit in Nigeria? Is it Regulated?
Photo: crypto regulation in Nigeria
With cryptocurrencies rising in popularity amongst Nigerians, regulators began to take notice. In a bid to curb the level of engagement of the citizens in cryptocurrency trading, the Central Bank of Nigeria (CBN) restricted commercial banks and other payment processors from facilitating cryptocurrency-related transactions. The ban took effect in January 2023, where Nigerian Banks were asked to terminate the savings account of any customer found guilty of trading crypto using naira-domiciled accounts.
Away from the restrictions, cryptocurrency trading is still legit in Nigeria as there has been no outright ban issued by the Federal Government. Hundreds of thousands of Nigerians can still trade Bitcoin and other cryptocurrency assets using exchanges and brokers.
Is Crypto Trading Taxable in Nigeria?
At present, Nigeria lacks a centralised regulatory framework that allows it to tax crypto trading. No specific regulation is currently in place to tax digital currencies and any transactions around them. According to the general tax laws in Nigeria, profit on income from any kind of investment should be treated as taxable. However, we are yet to see any real actions put in place to make crypto trading taxable in Nigeria.
Where Can I Trade Crypto In Nigeria?
To start buying, selling, and trading digital currencies, you will need a cryptocurrency trading platform in Nigeria. These platforms include cryptocurrency exchanges and CFD brokers. Those are the two main ways to trade crypto.
Crypto Exchanges
Cryptocurrency exchanges are platforms that simplify the process of trading bitcoin and other digital currencies. Most trusted exchanges allow you to deposit your money in an online wallet and still provide a marketplace for you to buy and sell any cryptocurrency of your choice. One such exchange is Binance , which is currently ranked as the biggest crypto exchange in the world. Binance facilitates crypto trading in Nigeria and other countries around the globe. In light of the restrictions from CBN that prevent Nigerians from directly funding their wallets from their Naira bank accounts, Binance created a peer-to-peer section that allows you to negotiate with fellow users and specify your prices in order to fund your account. In this case, Binance serves as the escrow.
Crypto Brokers
An alternative to trading crypto on exchanges is to use a broker. Crypto brokers allow you to trade cryptocurrencies using fiat. They also provide an easy way to fund your trading account via debit cards or bank transfers. One example of a crypto broker that supports direct naira payments is FXTM. So you just have to create an account, fund it, and start trading crypto CFDs.
How to Trade Cryptocurrency in Nigeria
Now that you understand the basics of cryptocurrencies, let's talk about how to start trading crypto. You need to follow a series of steps to begin your journey and become profitable. We will discuss the steps on how to trade cryptocurrency in Nigeria below.
Step 1. Choose a Trustable Crypto Trading Platform
You have to first choose a crypto trading platform to begin your journey in the world of digital currencies. While there are many platforms out there, you shouldn't just go with the first one you come across. Find a trading platform that is internationally recognised and regulated by well-known authorities. You also want to ensure that such a platform doesn't charge exorbitant fees in trading commissions, while also giving you the opportunity to earn passively from investing in crypto.
Step 2. Open an Account
After identifying a reputable crypto trading platform, go on to create an account with the exchange or broker. A trusted exchange will mostly require you to complete a KYC process where you have to capture your photo and submit some legal documents to prove your identity. These documents include your International Passport, Driver’s License, or National ID. In some cases, there will be a need to provide proof of address such as your bank statement or utility bill.
Step 3. Start With Minimal Investment
With your crypto trading account set up, it's time to make a deposit. Different cryptocurrency trading platforms in Nigeria have a minimum deposit amount with which you can start buying and selling digital currencies. An exchange like Binance has a $10 minimum, but you may decide to deposit anywhere from $100 to $200. That should help you mitigate your risk, making it easier to stop trading crypto should you end up on the losing side due to extreme market volatility.
Step 4. Test Your Strategy
Cryptocurrency trading in Nigeria is profitable but you will need to spend time building your knowledge about the market. That's the only way to determine what kind of trader you are – scalper, day-trader, short-term trader, or longer-term trader. Learning as much as you can also help you come up with a trading strategy that works for you. You’ll also be able to learn how to manage your risk because risk management is the most important trading skill. To be on the safe side, avoid over-leveraging and stick to low-activity trends while you home your skills.
Step 5 Improve your Skills
While you work to create and perfect your trading strategy, it's important to keep improving your skills. The only way to succeed in crypto trading is to continue trying out new ways to earn other than just leveraging. Try to learn about opportunities that allow you to earn passive income such as staking, farming, launchpads, and more, so you can take advantage of them. As a beginner, your ultimate goal should be to learn as many strategies as you can and preserve your trading capital by reducing your losses while maximizing your gains.
Best Crypto Trading Platforms in Nigeria
Now let's talk about some of the best crypto trading platforms in Nigeria. In this section, we will look at crypto exchanges, as well as CFD brokers. So if you are a beginner looking for the best cryptocurrency trading platform in Nigeria, check out some of the top-rated options below.
Binance – Best Crypto Exchange
Photo: Binance
Binance is currently the biggest cryptocurrency exchange in the world and is the most widely recommended. Although not regulated locally in Nigeria, the platform is internationally recognised and operates under the supervision of top financial bodies around the world. This exchange was set up in 2017 and has experienced fast growth, making it an ideal choice for beginners.
Apart from its web portal, Binance has a crypto trading app that comes with an easy-to-navigate interface. The app has a lite version dedicated to beginners, which makes it easier for newbies to create an account and start trading cryptocurrencies on the go. You can download the Binance app on Playstore or App Store and get access to more than 400 different cryptos.
When it comes to trading fees, Binance has a very fair fee structure pegged at 0.1%. But the fees paid will depend on how much trading capital you have. Balance also gives an opportunity to enjoy discounted fees as you climb up the VIP ranks. You can enjoy a 25% discount when you choose to pay your trading fees in its native coin known as BNB.
Binance P2P Is a popular service accessible both on the desktop version or mobile app. The peer-to-peer section allows users to buy and sell cryptocurrencies amongst each other while Binance plays the role of an escrow. Since CBN regulations in Nigeria prohibits commercial banks from facilitating any transactions relating to cryptocurrencies, you can fund your Binance account using the P2P section.
The exchange provides a robust set of educational materials to help beginners build their knowledge of crypto trading. Apart from that, Binance also offers the opportunity to earn passive income by providing other services such as staking and launchpads. The APYs and rewards seem fair enough and you can take advantage of them rather than have your cryptocurrencies sitting dormant in your wallet on the exchange.
eToro – Best For Copy Trading
Photo: eToro
eToro is more than just an exchange for traders. It's one of the best platforms if you’re looking to trade digital currencies in Nigeria. Some services offered by eToro that makes it friendly for beginners are its mobile app and mobile wallet. You can download them on Playstore or App Store and start enjoying the user-friendly design. Although this exchange doesn't offer as many cryptocurrencies as Binance, beginners can trade up to 27 of the most popular cryptocurrencies such as Bitcoin, Ethereum, Ripple, and others.
As a beginner interested in how to start trading crypto, there's nothing more important than having a supportive ecosystem with the right environment to help you develop your skills. With that in mind, one area where eToro excels is that it offers a copy trading feature. Copy trading is a social service designed to help beginners study the trading activities of more experienced traders and also copy their moves. So while learning all you can about cryptocurrencies, you can fund your trading account and allow more seasoned experts on the platform to determine what cryptos you trade until you are ready to do it yourself.
eToro doesn't have a rigid fee structure and its trading fees can be anywhere from 0.75% to 4.90%. So what you get to pay in trading commissions is based on what crypto you decide to trade.
FXTM - Best Crypto Broker
Photo: FXTM
FXTM has been in Nigeria for quite a while and is one of the first crypto brokers to set up operations in the country. Now it offers Nigerians an easy entry into the crypto market. FXTM currently has offices in two states which are Abuja and Lagos.
With FXTM, you can set up an account and start trading cryptocurrency CFDs. Some of the cryptocurrencies available for trading include Ripple, Litecoin, Ethereum, and Bitcoin, which the broker pegs against the United States dollar. Depositing money into your account is seamless with FXTM, and you can do so using different instruments such as fiat money and Bitcoin.
Speaking of fees, FXTM is a leader in terms of margins as it offers tight spreads. It has spreads from 0.0 pips and its commissions begin from $2. While it has an inactivity fee of $5 which you’ll have to pay in Naira every month, there are no deposit fees. FXTM provides reliable payment solutions so you can start trading as fast as possible. There are different payment options and you can fund your account using your e-wallet, bank transfer, credit card, or local bank payment.
To help you build your trading skills, this broker has created a free education portal that gives you access to free resources such as articles, ebooks, webinars, etc. Added to that is the FXTM Trader app that allows you to trade on the go while letting you monitor your profits, as well as the most recent rates.
Luno Nigeria
Photo: Luno
Luno is an exchange that has become a popular cryptocurrency trading platform in Nigeria. Starting in 2013, the exchange has its headquarters in the United Kingdom and now serves other countries in Africa.
Before the CBN restriction in January 2023, Luno allowed Nigerians to set up and fund their cryptocurrency accounts directly from their bank accounts. The best part is that Luno also offered trading pairs in the native currency of Nigeria, the Naira. So that meant you could easily sell your cryptocurrency out for fiat and withdraw the money to your bank account.
Luno supports Bitcoin trading but that's not all as you could also trade cryptocurrencies like Bitcoin Cash, Ripple, Litecoin, and Ethereum. Trading on the exchange is easy because it has a mobile application that is easy to navigate and intuitive. Luno has slightly outrageous fees which many day traders might find inconvenient. But that's a negligible limitation since it makes it easy to buy and trade cryptocurrencies in Nigeria.
Is Crypto Trading Profitable in Nigeria?
Cryptocurrency trading in Nigeria is profitable although there are no guarantees of earnings. The market is volatile and your actions, as well as market conditions, will determine whether you make profits or lose your capital. According to trends, it is easier to make profits when the market is in an uptrend, while it can be quite difficult to make as many gains when the market starts dumping on a downtrend. Trading crypto comes with risk. It’s a high-risk, high-reward market and your goal should be to manage your greed, reduce your risk, and preserve your capital using risk management strategies.
FAQs
Is crypto trading legal in Nigeria?
Yes, crypto trading is legal. The CBN only restricted commercial banks and other financial institutions from facilitating crypto transactions.
Is crypto a good investment?
Crypto trading exposes you to a highly volatile financial market where there’s a risk of losing your investment. If you’re okay with the risk, then you can trade crypto and add it to your portfolio.
How can I trade in cryptocurrency in Nigeria?
Create an account on a trusted crypto trading platform. Then fund your wallet with fiat and start buying, selling, or swapping any cryptocurrency of your choice.
How do I withdraw Bitcoin to my bank account in Nigeria?
If you have Bitcoin in your wallet on an exchange like Binance, you can sell it out using the P2P section. Binance will match you to a buyer who will then credit your bank account with the naira equivalent of the bitcoin.
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Team that worked on the article
Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.
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Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.
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Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.