The Securities and Exchange Commission (SEC) is currently developing new rules aimed at ensuring that all eligible transactions on regulated cryptocurrency exchanges are brought into the formal tax net.
According to a Bloomberg report, the SEC disclosed this in an email response to the publication’s questions.
SEC stated that the proposed rules are designed to capture tax revenue from cryptocurrency transactions, which have gained widespread popularity among Nigeria’s youthful and tech-savvy population.
The SEC acknowledged the “substantial amount of tax revenue that will accrue from cryptocurrency transactions,” though it did not provide specific estimates on the expected revenue.
Crypto trading in Nigeria
Cryptocurrencies have become increasingly popular in Nigeria, particularly as a hedge against high inflation and the steep depreciation of the naira against the US dollar since mid-2023.
- The SEC is also working to expand the scope of cryptocurrency licensing, including issuing permits that will enable residents to trade on formal, centralized exchanges.
- These platforms will allow for better monitoring of transactions and ensure compliance with tax regulations.
“We anticipate gradual traction toward centralized exchanges because they will provide greater protections and comfort for investors,” the SEC stated.
Crypto transaction bill
A bill outlining a framework for taxing crypto transactions and introducing other levies is currently before the National Assembly and is expected to be passed into law this quarter.
- This move aligns with President Bola Tinubu’s fiscal reforms, which aim to boost government revenue and reduce the budget deficit.
- Since taking office in 2023, Tinubu has prioritized overhauling Nigeria’s tax administration and improving fiscal sustainability.
- Last week, lawmakers approved a 2025 spending plan of N54.99 trillion ($36.4 billion), underscoring the government’s focus on revenue generation.
What you should know
Last August, Nigeria’s SEC announced that it had granted an Approval-in-Principle to two crypto exchanges Quidax and Busha, greenlighting its readiness to regulate the crypto industry in the country.
- The two exchanges were approved under the Accelerated Regulatory Incubation Program (ARIP) program of the Commission.
- In addition to that, the Commission also admitted four companies to test their models and technology under its Regulatory Incubation (RI) Program.
- The four firms are digital assets offering platforms, which include Trovotech Ltd, Wrapped CBDC Ltd, Dream City Capital, and HousingExhange.NG Ltd.
- The SEC noted that the listed above firms are not the only entities that have applied to ARIP and the RI Program.
It added that other applications received are being assessed and would be granted Approval-in-Principle on a case-by-case basis as they meet all its requirements.
