Nigeria to Tax Cryptocurrency Transactions for Revenue Boost

The Nigerian government has announced plans to impose taxes on cryptocurrency transactions to expand its revenue base.

Overview

On February 18 2025, Bloomberg reported that Nigeria plans to amend digital asset regulations to tax crypto transactions. This move is part of a broader effort to regulate the rapidly growing digital asset market and ensure that crypto traders contribute their fair share to the national economy. The taxation policy is expected to take effect soon, with the Federal Inland Revenue Service (FIRS) tasked with its implementation.

Crypto adoption in Nigeria has surged over the past few years, with the country emerging as one of the largest crypto markets in Africa. Many Nigerians use digital assets for remittances, trading, and investment purposes. However, the government has previously expressed concerns about the unregulated nature of the market, citing potential risks such as money laundering, tax evasion, and fraud. By introducing taxation, authorities aim to bring crypto activities under formal oversight while generating additional revenue to support economic growth.

Implementation and Expected Impact

The specifics of the taxation policy have yet to be fully disclosed. Still, early reports suggest that Nigeria will likely introduce a Value-Added Tax (VAT) on crypto transactions and a capital gains tax on profits derived from crypto trading. The government may also require crypto exchanges operating in Nigeria to withhold and remit taxes on behalf of their users. A proposed bill aimed at establishing a framework for taxing crypto transactions and other levies is currently under review by lawmakers. It is expected to be passed within this quarter.

Nigeria’s National Assembly, the country’s legislative body, resumed its 2025 session on January 14 2025. Industry analysts believe this move could have a mixed impact on Nigeria’s crypto ecosystem. On the one hand, it provides legitimacy to the sector, signalling that the government acknowledges digital assets as part of the formal economy. On the other hand, increased taxation could deter some investors and traders, potentially pushing crypto activities further into informal channels or offshore exchanges.

Authorities are expected to introduce more stringent regulations to monitor crypto transactions in addition to taxation. These measures may include mandatory exchange registration, Know Your Customer (KYC) requirements, and stricter anti-money laundering controls. The government hopes to create a more transparent and accountable crypto market by enforcing these regulations.

Reactions from the Crypto Community and Future Outlook

The announcement has sparked diverse reactions from Nigeria’s crypto community. Some stakeholders welcome the move, viewing it as a step toward the mainstream adoption of cryptocurrencies. They argue that taxation will help build a sustainable regulatory framework, attract institutional investors, and boost confidence in the sector. However, others have raised concerns about potential overregulation and its impact on innovation. 

Critics argue that excessive taxation could drive traders and businesses to offshore platforms or decentralised finance (DeFi) alternatives that are harder to regulate. Some also fear it may stifle the growth of Nigeria’s burgeoning crypto industry, which has been a significant source of employment and financial inclusion.

Nigeria’s approach to crypto taxation will likely evolve as the government refines its policies based on market responses. Whether this move will achieve its intended revenue objectives without negatively affecting the local crypto ecosystem remains to be seen. Nonetheless, the decision underscores Nigeria’s recognition of the growing influence of digital assets and its commitment to bringing them under regulatory oversight.