The Nigerian Securities and Exchange Commission (SEC) has proposed regulatory amendments to include Cryptocurrency trading and digital transactions under the official Tax system. With this measure, all qualified transactions on regulated exchanges will be subject to taxes. The regulator acknowledged the significant amount of Tax Revenue that will result from cryptocurrency transactions, although precise Revenue expectations were not revealed. As part of the reform, the SEC plans to expand its Crypto licensing system by allowing locals to Trade on centralized exchanges, which will improve investor protection, tax compliance, and transaction monitoring.
Currently, lawmakers are considering a bill that would establish a framework for taxing cryptocurrency transactions and imposing additional levies. On January 14, 2025, the Nigerian legislature, known as the National Assembly, met once again for the 2025 legislative session, with anticipation that the bill will be approved this quarter. According to Nigeria’s Securities and Exchange Commission, the proposed regulatory amendments for cryptocurrency transactions are targeted at collecting taxes from the rapidly growing digital asset sector.
Leveraging digital assets potential to boost revenue.
Cryptocurrency has gained immense traction in Nigeria, especially among the young, tech-savvy citizens of the nation. The country is well known for being a pioneer in the adoption of cryptocurrencies globally. 84% of Nigerian respondents to Consensys’ 2024 Perception Survey said they owned a cryptocurrency wallet, demonstrating the country’s strong adoption of digital banking. Nigeria’s dominance in the digital asset industry was further highlighted as the country was placed second globally in Bitcoin adoption in Chainalysis’s October 2024 Geography of Cryptocurrency Report.
Acknowledging this spike in activity, the SEC’s regulatory efforts aim to boost Government Revenue by leveraging this momentum in addition to maintaining market Security and transparency. Ultimately, the revenue generated by the rapidly expanding digital asset market could support the federal government’s larger Economic Diversification plan, lessening its excessive dependence on oil earnings and establishing Nigeria as a major African center for Innovation in digital assets. This extra source of income may aid in resolving Nigeria’s financial issues, such as budget deficits, mounting debt, and the need for increased funding for vital industries.
Policy shifts signal growing unity between SEC and CBN.
Looking ahead, the SEC anticipates that centralized exchanges will progressively become more popular as a result of the improved guarantees and protections they provide to investors. This development is a component of Nigeria’s larger endeavor to regulate its digital asset market, aligning with global trends. Significant progress has been made by Nigeria’s Securities and Exchange Commission (SEC) in formally incorporating cryptocurrencies into the nation’s established financial system. The adventure officially started in September, when the SEC opened its doors to cryptocurrency exchanges looking for operating licenses. Subsequently, the commission confirmed that at least 50 exchanges had submitted applications for authorization to conduct business in the nation.
By December 2024, the SEC furthered its regulatory agenda through modification of existing regulations to guarantee that bitcoin trading and other digital transactions would be taxable. As evidenced by the policy approach, there is a growing alignment between the SEC and the Central Bank of Nigeria (CBN), which had previously had a more restrictive posture on cryptocurrencies. The CBN published operational rules for Virtual Asset Service Providers (VASPs) in December 2023, enabling banks and other financial institutions to collaborate with cryptocurrency companies.
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This was a reversal of the CBN’s February 2021 decision, which had mandated that banks shut down cryptocurrency-related accounts. The campaign to tax digital assets can also be traced back to December 2022, when Zainab Ahmed, the Finance minister at the time, declared that provisions to tax cryptocurrency and other digital assets had been added to the Finance Bill. These developments reflect Nigeria’s changing strategy for embracing the Digital Economy and attempting to capitalize on its income potential.