Nigeria plans to tax Crypto industry by licensing Crypto exchanges
The federal government has plans to tax cryptocurrency transactions as part of larger measures to increase government revenue. The tax framework bill is being reviewed and is anticipated to be passed this quarter.
The SEC intends to establish a formal tax system for qualified cryptocurrency transactions on regulated exchanges. However, the financial watchdog did not provide precise numbers, it acknowledged the “substantial amount of tax revenue that will accrue from cryptocurrency transactions.”.
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The SEC plans to grant additional licenses for centralized cryptocurrency exchanges in addition to taxation. The financial regulator thinks these exchanges will provide superior investor protection and monitoring capabilities.
Lawmakers are considering a bill to tax cryptocurrency transactions. It is anticipated that this bill will be approved this quarter.
The Nigerian Securities and Exchange Commission (SEC) stated that it is also seeking to expand cryptocurrency licensing by granting licenses to cryptocurrency exchanges to monitor and tax transactions. The federal agency believes that this will also boost investor comfort and confidence.
When the SEC of Nigeria granted its first license to a cryptocurrency exchange in August 2024, it marked the start of regulatory oversight and clarity for cryptocurrencies in the African country.
The SEC intended to begin enforcement actions against unregulated exchanges later, in September 2024; however, at that time, there were only two regulated exchanges in the nation.
The watchdog anticipates that centralized exchanges will progressively become more popular because of the improved guarantees and protections they provide to investors.
This comes after international scrutiny of Nigeria’s handling of crypto-related issues and the country’s increasing adoption of crypto assets
Nigeria’s FG budget calls for spending of N55 trillion ($36.4 billion), and cryptocurrency taxes, viewed as a possible source of extra funding to help reach these goals.
Nigeria has led the way in adopting cryptocurrencies. Eighty-four percent of Nigerian respondents to Consensys’ 2024 Perception Survey claimed to have a cryptocurrency wallet. Chainalysis ranked Nigeria No. 1 in its October 2024 Geography of Cryptocurrency Report and No. 2 in the world for cryptocurrency adoption, demonstrating Nigeria’s desire for decentralized finance
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