It’s 2026, and you’ve been holding Bitcoin, USDT, or Ethereum for months. You’re ready to cash out - but when you try to move crypto to naira, your bank freezes your account. You’re not alone. Thousands of Nigerians face this exact situation every month, even though crypto is now legal. The truth isn’t simple: banks don’t block crypto withdrawals outright anymore, but they’ve built walls around them. And if you don’t know how those walls work, you’ll get stuck on the wrong side.

Legal, But Not Welcome

In December 2023, the Central Bank of Nigeria (CBN) officially lifted its three-year ban on crypto transactions. Then, in March 2025, President Tinubu signed the Investments and Securities Act (ISA 2025), making digital assets legal securities under the oversight of the Securities and Exchange Commission (SEC). On paper, this should’ve opened the floodgates. But banks didn’t cheer. They tightened their grip.

Today, Nigerian banks don’t say no to crypto withdrawals - they say only if. Only if your exchange is licensed. Only if your KYC is perfect. Only if your transaction history looks clean. Only if you don’t withdraw more than your bank secretly allows. And only if you never, ever try to pull cash from an ATM linked to crypto funds.

What Banks Actually Allow

If you’re using a licensed platform like Luno, you can withdraw crypto to naira and get the money in your bank account - usually within hours. These platforms are approved by the SEC, and banks treat them like any other financial service provider. The transfer shows up as a bank debit from Luno’s corporate account to your personal account. No red flags. No delays. Just standard processing.

But here’s the catch: banks treat every crypto-related transaction as high-risk. That means:

• Withdrawal limits are hidden. Some users report ₦200,000 daily caps; others see ₦500,000 weekly. No bank publishes these. They change without notice.
• Cash withdrawals from crypto accounts are strictly forbidden. If you try to use an ATM linked to a crypto-funded account, your card will be blocked within minutes.
• Large or sudden transfers trigger compliance reviews. If you suddenly withdraw ₦10 million after months of small deposits, your bank will ask for proof of where the crypto came from - trade history, wallet addresses, exchange statements.

Banks aren’t trying to be mean. They’re trying to survive. If they process one suspicious transaction and the EFCC finds it’s linked to money laundering, they could face fines, sanctions, or even lose their license. So they err on the side of caution - even if it means inconveniencing legitimate users.

The Account Freezing Epidemic

In September 2024, the Economic and Financial Crimes Commission (EFCC) froze 22 bank accounts tied to USDT sellers on unlicensed exchanges like Bybit and KuCoin. Total amount frozen: ₦548.6 million. The reason? Alleged manipulation of the naira exchange rate.

That wasn’t an isolated case. Since early 2025, over 180 accounts linked to unlicensed crypto activity have been frozen nationwide. The EFCC doesn’t need a warrant to act - they just notify the bank, and the bank freezes the account immediately. No warning. No appeal process. Just silence.

This is why so many Nigerians avoid P2P trading. If you sell Bitcoin to someone in person and they deposit naira into your account, that deposit looks suspicious. Banks flag it. EFCC flags it. Your account gets locked. And you have no way to prove it was a legal trade unless you have receipts, video, and a signed contract - which most people don’t.

Who Can Withdraw Smoothly?

There’s a two-tier system now:

• Tier 1: Licensed Exchange Users - If you use SEC-approved platforms like Luno, Breet App, or Coinmama Nigeria, your withdrawals are processed as electronic transfers. Banks see the source as a regulated entity. Your account stays open - as long as you don’t trigger red flags.
• Tier 2: Unlicensed or P2P Users - If you trade on Binance, Bybit, or local P2P apps not licensed by the SEC, your bank will treat your deposits as high-risk. Even if the money is clean, the pattern looks like money laundering. Your account will be frozen, and you’ll need a lawyer to get it back - if you’re lucky.

Some fintech banks - like Opay, Palmpay’s banking arm, and Kuda - are slightly more flexible. They’ve built systems to recognize SEC-licensed transfers and process them faster. Traditional banks like GTBank, Zenith, and Access Bank remain the most cautious. They still treat crypto like a virus.

What Banks Watch For

Banks don’t just look at the amount you withdraw. They look at the pattern:

• Frequency - Three withdrawals in one week? Red flag.
• Size - A ₦5 million withdrawal after years of ₦50,000 deposits? Suspicious.
• Timing - Deposits right after crypto price spikes? They track that.
• Source - If your bank account receives funds from a wallet address linked to a banned exchange, it’s game over.

Banks use AI tools to detect anomalies. A single withdrawal of ₦3 million might be fine. But if you do it every Tuesday, the system flags you. You’ll get an email asking for “source of funds documentation.” Ignore it? Your account gets frozen.

What You Must Do to Stay Safe

If you want to withdraw crypto to fiat without getting locked out:

1. Use only SEC-licensed exchanges. Check the SEC Nigeria website for the official list. Don’t assume Binance or KuCoin are safe - they’re not licensed locally.
2. Keep full records. Save your trade history, wallet addresses, and exchange statements. You might need them in 48 hours.
3. Don’t withdraw more than your usual income. If you earn ₦150,000/month, don’t suddenly withdraw ₦2 million from crypto. It looks like money laundering.
4. Avoid cash withdrawals entirely. Never use an ATM linked to crypto funds. Use bank transfers only.
5. Use multiple banks. If one freezes your account, you still have access through another. Don’t put all your money in one bank.
6. Don’t use P2P unless you have proof. If you must, record the transaction, get the buyer’s ID, and send via bank transfer - never mobile money.

The Tax Time Bomb

The Federal Inland Revenue Service (FIRS) hasn’t started taxing crypto yet - but they’re ready. A new Finance Bill is expected to pass in early 2026, which would classify crypto gains as taxable income. Once it does, banks will be required to report all crypto-to-fiat withdrawals over ₦500,000 to tax authorities.

That means: if you withdraw ₦7 million in a year, the tax office will see it. They’ll ask: “Where did this come from?” If you can’t prove it was from trading - not illegal activity - you could face penalties, interest, or even prosecution.

The Bigger Picture

Nigeria wants to be a global crypto hub. The SEC’s licensing system, the ISA 2025, and the push to get off the Financial Action Task Force’s Gray List show that. But the government doesn’t want wild west crypto. It wants controlled, traceable, taxed crypto.

Banks are just doing what they’re told: protect the system, not help users. They’re not the enemy. But they’re not your ally either.

If you treat crypto like a bank account - with records, limits, and compliance - you’ll be fine. If you treat it like gambling with cash under the mattress, you’ll get caught.

What Happens If Your Account Gets Frozen?

You’ll get a message from your bank: “Your account is under review.” No reason. No timeline.

Your next steps:

• Don’t panic. Don’t call the EFCC. Don’t post on social media.
• Gather every document: exchange statements, wallet addresses, trade logs, ID verification from the crypto platform.
• Visit your bank branch in person. Ask for the compliance officer. Bring your documents.
• Be polite. Be patient. This process takes 30-60 days.
• If they refuse to unblock you, hire a lawyer who specializes in financial regulation. It’s expensive, but it’s your only shot.

Most accounts are unfrozen if you prove legitimacy. But if you can’t prove it? You might lose access permanently.