Nigeria SEC Set To Tax Crypto Trading and Digital Asset Transactions: Bloomberg

Nigeria is moving to regulate and tax crypto transactions as part of broader efforts to boost government revenue. 

According to a Bloomberg report, the Nigerian Securities and Exchange Commission (SEC) is working on new rules to ensure all eligible transactions on regulated exchanges fall under a formal tax framework.

A bill outlining the taxation structure is currently before lawmakers and is expected to be adopted this quarter. 

The SEC has acknowledged the potential for substantial tax revenue from cryptocurrency transactions, although exact projections have not been disclosed.

The push for crypto taxation aligns with President Bola Tinubu’s fiscal policies of increasing government revenue and reducing the budget deficit.

Since assuming office in 2023, Tinubu has implemented various tax administration reforms, including a recently approved 54.99 trillion naira ($36.4 billion) spending plan for 2025.

Additionally, the SEC plans to extend crypto licensing, allowing more centralized exchanges to operate formally. The agency believes this shift will enhance transparency, ensure investor protection, and facilitate easier tax enforcement.

A History of Nigeria’s Crypto Regulation and Market Struggles

Just last year, Nigeria emerged as the second-largest country in the world for cryptocurrency adoption, driven by a youthful, tech-savvy population and ongoing economic instability. 

However, the government’s regulatory stance on crypto has been inconsistent over the years, creating challenges for investors and businesses alike.

This clear war against Crypto started in February 2024 when Tigran Gambaryan, Binance’s Head of Financial Compliance, was arrested.

Although Gambaryan was not initially charged, a Nigerian court later ruled that he could face money laundering and tax evasion charges on behalf of Binance, which led to an eight-month detention before release.

🚨 NEW: Binance’s @TigranGambaryan finally speaks out on his shocking eight-month ordeal in Nigeria, calling it a “trap” by the government.

Read Full Story: https://t.co/nzgpIDeR9n pic.twitter.com/mYN04s8arQ

— Coinwaft (@coinwaft) February 16, 2025

Nigeria’s crackdown on cryptocurrency extends beyond Binance. Due to regulatory uncertainty, international exchanges are being pushed out.

OKX announced its exit from Nigeria in August 2024, and KuCoin imposed a hefty tax on transactions, chasing most Nigerians away. 

The government has finally stopped OKX from soliciting sign-ups from Nigerians.

First, NGN was removed from the P2P market, and now new sign-ups are no longer allowed.

Are they gonna come after other exchanges? 🤔

It seems the government is not aware they can't win this war… pic.twitter.com/3YeCgoeeJK

— damx 👾 (@0xdamx) July 16, 2024

Fast-forward to May 2024. The Nigerian SEC directed exchanges to delist naira trading pairs, blaming them for currency manipulation and inflation. In fact, the government even blocked direct access to all these major exchanges.

As a result, users struggled to access platforms like Coinbase, jeopardizing the country’s 9% growth in crypto transactions from the previous year.

Following that, the Central Bank of Nigeria (CBN) banned banks from processing cryptocurrency payments, forcing many users to rely on peer-to-peer (P2P) trading.

The government’s inconsistent stance on crypto stems from the country’s economic challenges, including inflation and currency instability. 

Authorities face a dilemma: banning crypto risks driving activity underground while allowing it could further weaken the Naira.

Regulatory bodies such as the CBN and the SEC have adopted contradictory positions. The CBN has historically restricted crypto transactions, while the SEC has attempted to introduce regulations.

Senator Ihenyen, a leading crypto lawyer, argues that Nigeria’s regulatory failures have fueled the rise of P2P markets, now perceived as a threat to the economy.

Bans, crackdowns, and policy reversals have so far largely marked Nigeria’s crypto stance. 

The CBN first warned against Bitcoin in 2017, later banning crypto transactions in 2021, only to lift the ban in 2023 under strict licensing conditions. 

Despite launching the e-Naira CBDC, Nigeria has struggled to integrate crypto into its financial system. Recent measures, including directing fintech firms to block crypto-related accounts, though it worked with limited success.

The government even demanded user data, suspecting certain traders were responsible for destabilizing the naira. 

Despite all these hostilities and restrictions, Nigeria’s crypto ecosystem continued to thrive. Many Nigerians still use digital assets to hedge against inflation and the depreciation of the Naira.

Expanding Licensing and Centralized Exchanges

With its new taxation initiative, Nigeria is shifting focus towards regulated, centralized exchanges. 

The SEC anticipates a gradual transition from P2P trading to formal exchanges, where transactions can be monitored and taxed effectively.

This initiative builds on Nigeria’s previous regulatory efforts. In August 2024, the SEC granted in-principle approval to two digital asset exchanges, Busha Digital Limited and Quidax Technologies Limited, under its Accelerated Regulatory Incubation Programme (ARIP).

BREAKING NEWS: SEC has approved two exchanges Quidax and Busha as legally recognized crypto exchanges in Nigeria 🇳🇬

Thoughts on this ? pic.twitter.com/oPuPQ56lJ0

— Nigeria Stories (@NigeriaStories) August 29, 2024

Five other firms were also admitted to the SEC’s Regulatory Incubation Program (RI), which allows them to operate within a controlled framework while ensuring compliance.

The SEC’s recent push for taxation and licensing reflects an attempt to integrate cryptocurrency into Nigeria’s formal economy while maintaining stricter oversight.

While the introduction of this new crypto taxation may bring Nigeria in line with global financial standards, it remains to be seen how it will affect local traders and investors. 

Many Nigerians have turned to crypto, particularly through P2P transactions, as an alternative financial system amid economic hardship, and increased regulation could pose new challenges for users accustomed to decentralized trading.

However, the government argues that regulating and taxing crypto transactions will create a more secure and transparent market, ultimately benefiting investors and the broader economy. 

Whether this move will build trust and stability in Nigeria’s crypto space or push more users toward underground trading remains unclear.