Key Notes
- The Nigerian SEC aims to increase licensed exchanges to enhance oversight while taking enforcement actions against unregulated platforms.
- Major exchanges including OKX, Binance and KuCoin have faced regulatory challenges, with some suspending services in the Nigerian market.
- Recent regulatory updates include a 7.5% VAT on digital assets and stricter marketing rules to protect investors from potential scams.
The Nigerian government is set to revise its cryptocurrency regulations to include digital asset transactions under its tax framework.
The decision comes as part of efforts to generate revenue and stabilize the economy following fuel subsidy removals under President Bola Tinubu’s administration, according to a Bloomberg report.
Nigerian Lawmakers Push for Crypto Taxation
To address economic challenges and ease financial strain on citizens, Nigerian lawmakers are considering imposing taxes on digital asset transactions carried out on regulated exchanges. While banks remain prohibited from facilitating crypto transactions, the government believes that taxing crypto activities could provide an essential revenue stream.
According to Bloomberg , lawmakers are currently reviewing a proposed bill that includes crypto taxation alongside other tax reforms. If approved, the law is expected to pass within the first quarter of 2025.
The latest development follows the country’s previous tax measures on digital assets. In July 2024, Nigeria imposed a 7.5% value-added tax (VAT) on digital asset transactions, prompting compliance from exchanges such as KuCoin, which adjusted its transaction fees accordingly.
SEC Seeks to Expand Licensed Crypto Exchanges
In addition to taxation, the Nigerian Securities and Exchange Commission (SEC) is working on increasing the number of licensed crypto exchanges in the country.
According to Bloomberg, the SEC aims to issue regulatory licenses to crypto firms to enhance oversight, ensure compliance, and facilitate taxable transactions. The regulatory body believes that a structured environment will boost investor confidence and create a more transparent crypto ecosystem.
The SEC granted its first official crypto exchange license to Quidax in August 2024, marking a significant step towards regulatory clarity. Shortly after, the agency began planning enforcement actions against unregulated exchanges in September.
Regulatory Crackdown on Unregistered Crypto Firms
Nigeria’s tightening crypto regulations have already impacted several major players in the industry. In May 2024, OKX suspended Naira withdrawals due to regulatory concerns, which eventually led to the company leaving the market.
Other exchanges like Binance also faced scrutiny from the Nigerian government. Authorities in the African country accused the exchange of manipulating the local currency, through its peer-to-peer (P2P) services. The company also faced other allegations such as money laundering, and facilitating tax evasion.
As a result of these allegations, Binance were forced to halt P2P services for Nigerian users. Shortly after, KuCoin also followed suit, removing the Nigerian naira from its platform.
Further escalating its crackdown, Nigeria’s Economic and Financial Crimes Commission (EFCC) demanded Binance provide user data for individuals who traded on its platform.
Additionally, in December 2024, the Nigerian SEC updated its crypto marketing regulations to curb the influence of social media promoters advertising unregulated crypto products. The move was intended to protect investors from potential scams and misinformation.
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