Nigeria to Tax Cryptocurrency Transactions: New Regulations on the Way

The Nigerian government is accelerating efforts to regulate and tax cryptocurrency transactions, aiming to strengthen control over the digital asset market while boosting national revenue.

Despite ranking among the top countries in crypto adoption, Nigeria has taken a cautious approach to digital assets, imposing restrictions in 2021. At the time, the Central Bank of Nigeria (CBN) banned financial institutions from facilitating crypto transactions, citing concerns over transparency and potential use in illicit activities.

However, the ban did little to deter Nigerian investors. Many turned to peer-to-peer (P2P) platforms, leading to a surge in unofficial trading volumes. Recognizing the resilience of the crypto community and its economic potential, the government lifted the ban in December 2023.

Following this policy shift, the Securities and Exchange Commission (SEC) introduced new guidelines allowing banks to manage cryptocurrency accounts. Additionally, the Finance Act 2022 paved the way for taxing crypto transactions, integrating the sector into the national tax framework. Under the new regulations, virtual asset service providers (VASPs) must obtain licenses to operate legally. Nigerian crypto platforms Busha and Quidax have already secured provisional licenses.

Comparison with South Africa

Unlike Nigeria, South Africa has adopted a more structured and inclusive regulatory approach. The country’s Financial Sector Conduct Authority (FSCA) recognizes crypto service providers as financial institutions, offering them a clear regulatory framework. This provides a more stable environment for crypto businesses, contrasting with Nigeria’s evolving and often uncertain policies.

The long-term impact of Nigeria’s new tax and regulatory measures on its crypto ecosystem remains to be seen.

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