Nigerian Authority Amending Regulations to Tax Cryptocurrency Transactions

The Securities and Exchange Commission (SEC) is amending regulations to ensure that all eligible transactions on regulated exchanges fall within the formal tax net.

In a report by Bloomberg on Tuesday, the commission, in an emailed response to questions, said that it seeks to boost revenue by taxing cryptocurrency trading and digitised transactions.

Without specifying how much revenue it expects to generate, the SEC acknowledged that cryptocurrency transactions will contribute a substantial amount to tax revenue.

The SEC said it is also expanding the scope of crypto licensing, including issuing permits that will allow residents to trade on formal centralised exchanges where transactions can be monitored and taxed.

“We anticipate gradual traction toward centralized exchanges, because they will provide greater protections and comfort for investors,” the regulator said.

In December 2023, the Central Bank of Nigeria (CBN) issued operational guidelines on virtual assets service providers (VASPs) to all banks and other financial institutions (OFIs).

The development signalled a shift from CBN’s initial position, which restricted cryptocurrency transactions.

In February 2021, CBN issued a circular instructing deposit money banks (DMBs), non-bank financial institutions (NBFIs), and OFIs to close accounts of persons or entities involved in cryptocurrency transactions within their systems.

In December 2022, Zainab Ahmed, a former minister of finance, budget and national planning, stated that the 2022 finance bill included provisions to tax cryptocurrency and other digital assets.

On September 12, 2024, Emonotimi Agama, director-general of the SEC, said 50 cryptocurrency exchanges have applied for operational licences in the country.