By 
Matters eRising with Olusegun Oruame
The Nigerian government is poised to settle the debate on regulating cryptocurrency with new legislation. Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), recently announced plans to introduce a comprehensive law next month that will overhaul Nigeria’s revenue administration process and bring digital enterprises, including cryptocurrency, firmly within the tax net.
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Adedeji made it clear that the new tax administration will address the rapidly growing digital market in Nigeria, emphasizing the need to regulate cryptocurrency in a way that supports economic development while safeguarding financial stability. He noted that Nigeria’s current tax laws are outdated and in urgent need of reform, including the harmonization of revenue, modernization of recording systems, and simplification of existing tax regulations.
Ongoing debate on taxing cryptocurrency transactions
The issue of taxing cryptocurrency transactions has been a subject of ongoing debate in Nigeria. In 2022, then-Minister for Finance, Budget, and National Planning, Zainab Ahmed, proposed a policy to tax cryptocurrency and other digital assets through a Finance Bill, which was eventually signed into law by President Muhammadu Buhari as the Finance Act 2023.
Key highlights of the Finance Act 2023 include a Value Added Tax (VAT) on goods purchased via electronic or digital platforms from non-resident suppliers, which would be charged to VAT and paid by the importer unless proof of appointment and registration with FIRS is provided. The Act also introduces a Capital Gains Tax (CGT) on the disposal of digital assets, including a 10% CGT on gains from the sale of such assets.
However, it appears the Finance Act 2023 did not fully address the government’s objectives, prompting the current administration under President Tinubu to expand its scope to encompass digital assets, including cryptocurrencies.
Cryptocurrency regulation and Nigeria’s policy inconsistencies
Nigeria has faced obvious policy inconsistencies regarding cryptocurrency regulation, reflecting confusion and a lack of clarity on the best approach to digital transactions. In 2021, the Central Bank of Nigeria (CBN) banned cryptocurrency transactions, instructing financial institutions to close accounts associated with crypto activities. A year later, the Securities and Exchange Commission (SEC) sought to regulate cryptocurrencies and other digital assets, requiring entities offering crypto-related services to obtain a Virtual Asset Service Provider (VASP) license. While the SEC has adopted a more open stance towards regulating cryptocurrency, the CBN has maintained a restrictive approach, particularly after launching its own digital currency, the eNaira, in 2021.
The CBN’s primary concerns regarding cryptocurrency include the anonymity it provides, which could facilitate fraud, currency volatility, and terrorism financing—issues that remain significant challenges for the Nigerian government. In 2023, the CBN temporarily lifted a two-year restriction on cryptocurrency transactions but reinstated the ban in early 2024 as part of broader efforts to combat speculative activities in the forex market. This back-and-forth raised doubts about Nigeria’s commitment to fostering a crypto-friendly environment.
In addition, the Nigerian Communications Commission (NCC) issued directives to telecom companies to block consumer access to cryptocurrency-related websites, including popular platforms like Binance, Coinbase, and Kraken. Following these measures, several Binance officials were detained, accused of engaging in activities that undermine the stability of the Nigerian Naira, including facilitating transactions totaling over $26 billion from unidentified sources within a year.
Bringing cryptocurrency under regulatory oversight
While there has been no official statement on a potential policy reversal, Adedeji’s remarks suggest the government may be open to allowing cryptocurrency to thrive, provided it is brought under regulatory oversight and taxed appropriately.
Despite repeated bans on crypto-related transactions in Nigeria’s banking sector, the country remains Africa’s largest cryptocurrency market. A report by CoinJournal.net highlights Nigeria, Turkey, and the UAE as the top countries by crypto ownership in 2023, with over 45.5 million Nigerians reportedly trading or owning crypto assets. Additionally, an older Statista Global Consumer Survey indicated that Nigerian consumers are among the most likely to use digital currencies daily, surpassing other African nations.
Cryptocurrencies, which exist digitally or virtually and use cryptography to secure transactions, operate without a central issuing or regulating authority. This decentralized nature has led to a transformation in wealth creation, offering unprecedented opportunities in the digital age. However, the lack of transparency associated with cryptocurrencies has prompted many jurisdictions, including Nigeria, to approach them with caution.
Setting rules in a market notoriously opaque
The Nigerian government now appears determined to remove any hesitancy surrounding cryptocurrencies by establishing clear administrative and legal guidelines for their use. This move aims to set firm rules in a market that has been notoriously opaque, recognizing the potential of the sector while ensuring that the benefits are harnessed for economic growth and stability. By doing so, the government hopes to better understand the crypto ecosystem and create a more favourable environment for its regulation and taxation, ultimately benefiting all stakeholders involved.
