Nigeria Paves the Way for Crypto Regulation: Licensing and Tax Overhaul Ahead
Nigeria’s Securities and Exchange Commission (SEC) is set to take a significant step in regulating the cryptocurrency and virtual asset industry within the country. In a series of developments, the SEC plans to issue its first-ever licenses for digital service providers and tokenized assets as early as this month, August 2024.
According to Emomotimi Agama, the SEC Director-General, this move is driven by the rapid growth and increasing adoption of cryptocurrencies in Nigeria. “Being a crypto and fintech enthusiast, I can tell you this is going to happen sooner than expected. We must support the youth of this country in harnessing the benefits that fintech offers. The market is vast and continues to grow,” Agama said in an interview with Bloomberg.
Nigeria’s decision to introduce a licensing regime for virtual asset service providers (VASPs) aligns with the regulatory actions taken by other global markets, such as the European Union, South Africa, and Botswana. This step aims to bring more structure and oversight to the crypto ecosystem, addressing concerns over currency manipulation and investor protection.
Alongside the licensing initiative, the Nigerian government is also preparing to introduce a new tax bill by September 2024. The Federal Inland Revenue Service (FIRS) plans to outline regulations and taxation for cryptocurrency transactions, ensuring that the government can benefit from the growing crypto activities within the country.
This development comes after a period of challenges for the Nigerian crypto market, including a previous ban on banks facilitating crypto transactions. The authorities were concerned about the impact of these activities on the value of the naira, the local currency, which has faced significant depreciation against the US dollar.
The SEC’s upcoming licensing regime and the planned tax legislation are expected to provide a more structured and transparent environment for digital asset transactions in Nigeria. This move is anticipated to further integrate cryptocurrencies and other virtual assets into the country’s financial system, while also addressing the government’s concerns over currency manipulation and tax evasion.
As Nigeria takes these proactive steps, the crypto industry in the country is closely watching the regulatory landscape. Some exchanges, such as OKX, have already discontinued their services in the region due to changes in local regulations. However, the broader expectation is that the new licensing and tax framework will create a more stable and secure environment for the crypto market to thrive in Nigeria.
