Nigeria is taking steps to tax cryptocurrency transactions in an effort to boost government revenue, as announced by the country’s Securities and Exchange Commission. A bill outlining the tax framework is currently under review and is expected to pass this quarter, according to a report by Bloomberg.
The SEC is planning to bring eligible cryptocurrency transactions on regulated exchanges into the formal tax system. The regulator has acknowledged the potential for a significant amount of tax revenue to be generated from cryptocurrency transactions, although specific figures have not been provided.
This move comes at a time when Nigeria is facing challenges such as high inflation and a weakened naira, prompting many residents to turn to cryptocurrencies as a hedge. Since assuming office in 2023, President Bola Tinubu has implemented fiscal reforms aimed at increasing revenue and reducing the national deficit.
In addition to taxation, the SEC also plans to issue more licenses for centralized cryptocurrency exchanges. The regulator believes that these exchanges will offer better monitoring capabilities and investor protections compared to decentralized alternatives. It is expected that centralized exchanges will gradually gain popularity due to the enhanced protections and assurances they provide to investors.
The decision to issue more licenses for centralized exchanges comes amidst a backdrop of increasing cryptocurrency adoption in Nigeria and international scrutiny of the country’s approach to regulating the sector. Recent events, such as the release of a detained Binance executive and criticism from U.S. lawmakers, have highlighted the importance of effective regulation in the cryptocurrency space.
Nigeria’s 2025 budget includes a spending plan of 54.99 trillion naira ($36.4 billion), with cryptocurrency taxes being viewed as a potential source of additional revenue to help meet these targets.
Overall, the regulatory developments in Nigeria reflect a growing recognition of the importance of cryptocurrency taxation and regulation in ensuring a stable and secure financial environment for investors and the broader economy.