The Nigerian Federal Inland Revenue Service (FIRS) has recently announced plans to introduce legislation to tax the rapidly growing crypto sector in the country. This move is seen as a step towards driving economic growth and innovation, as well as modernizing Nigeria’s regulatory framework to incorporate new technologies that have previously been unaddressed by existing laws.
Industry experts have long been urging the Nigerian government to adopt a regulatory framework for the crypto sector. In 2021, when the government banned financial institutions from interacting with cryptocurrencies, a university professor named Tayo Oyedeji suggested that emerging economies like Nigeria should prioritize taxation over prohibition. He argued that Nigeria, being a significant crypto market, could potentially generate millions in revenue from crypto gains tax.
Nigeria is known to be one of the largest crypto markets in Africa, with the Nigerian Securities and Exchange Commission (SEC) estimating the country’s digital assets market to be worth over $400 million. This substantial market value has prompted some crypto platforms to start collecting Value-Added Tax (VAT) on transaction fees, such as KuCoin’s recent announcement of a 7.5% VAT charge on all transaction fees in Nigeria.
The push for crypto regulation in Nigeria has intensified in recent times, with Finance Minister Wale Edun urging the SEC to provide regulatory clarity for the industry. This urgency comes in the wake of a crackdown on crypto platforms, leading to the exit of global players like OKX from the Nigerian market. Furthermore, Binance, one of the largest crypto exchanges globally, is currently facing legal action from Nigerian authorities over alleged money laundering and tax evasion. Tigran Gambaryan, a Binance executive, is currently detained at the Kuje Correctional Centre in Abuja amidst mounting international pressure for his release due to health concerns.
The introduction of legislation to regulate and tax the crypto sector in Nigeria is a significant step towards boosting economic growth, encouraging innovation, and modernizing the country’s regulatory environment. Despite challenges and controversies surrounding the industry, it is clear that there is a pressing need for clear and comprehensive regulations to ensure the sustainable growth of the crypto market in Nigeria.
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