Nigeria is intensifying its efforts to regulate and tax cryptocurrency activities, aiming to bolster national revenue and exert greater oversight over the burgeoning digital asset market. The Securities and Exchange Commission is revising regulations to encompass cryptocurrency transactions within the tax framework, reflecting a significant policy shift from previous restrictions to a more structured approach.
In a landmark legal move, Nigeria has filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, seeking $79.5 billion in economic damages and an additional $2 billion in back taxes for the past two years. This lawsuit, as reported by Reuters, accuses Binance of tax evasion and attributes part of the nation’s currency challenges to the exchange’s operations. The legal action follows a series of regulatory crackdowns, including the detention of two Binance executives in 2024, highlighting the government’s intensified scrutiny of cryptocurrency platforms.
The SEC’s proposed amendments aim to bring eligible cryptocurrency transactions on licensed exchanges under the country’s tax regime. A bill outlining this tax structure is currently under review and could be enacted within the quarter. While specific revenue projections have not been disclosed, officials anticipate substantial gains, given Nigeria’s prominent position in global cryptocurrency adoption. According to Chainalysis, Nigeria ranked second on the Global Crypto Adoption Index, with approximately $59 billion in cryptocurrency value received between July 2023 and June 2024.
The Finance Act of 2023 introduced a 10% tax on profits derived from the sale of digital assets, including cryptocurrencies. This initiative, implemented in May 2023, aligns with the government’s broader objective to expand its revenue base by tapping into the digital economy. Emomotimi Agama, Director-General of the SEC, emphasized the potential of this sector, noting that Nigeria’s cryptocurrency transaction volume reached $56.7 billion between July 2022 and June 2023, representing a 9% year-over-year growth.
Despite these regulatory advancements, Nigeria’s relationship with cryptocurrency has been complex. In 2021, the Central Bank of Nigeria prohibited financial institutions from facilitating cryptocurrency transactions, a ban that was lifted in 2023. The current regulatory framework seeks to balance the benefits of digital assets with the need for oversight and security.
