By Uche Usim and Merit Ibe
The cryptocurrency space in Nigeria is set to be remodelled as the Federal Government unveils new tax laws by September, with a special focus on regulating the booming digital currency industry.
This was revealed by Dr. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), during the 2024 FIRS Stakeholders engagement with the Senate and House of Representatives Committees on Finance in Lagos at the weekend.
Nigeria, one of the largest cryptocurrency markets in Africa, has seen rapid growth in digital currency adoption, as approximately 33% of the Nigerian population holds some form of cryptocurrency and the market is valued at an estimated $400 million. According to a report by Chainalysis, Nigeria’s cryptocurrency transactions saw a 9% year-on-year increase, with transaction volumes reaching $56.7 billion between July 2022 and June 2023. Despite this explosive growth, the country currently lacks a legal framework to regulate cryptocurrency transactions.
Dr. Adedeji emphasised the urgency of establishing clear regulatory guidelines for the cryptocurrency sector, noting that the absence of such regulations exposes the economy to significant risks. “While we cannot avoid cryptocurrency, we must plan to regulate it effectively,” he said. “This is standard practice in other countries. Innovation requires regulation to ensure it supports rather than harms economic development.”
The forthcoming tax laws will not only address the cryptocurrency sector but also aim to modernize Nigeria’s broader tax and revenue administration system. Dr. Adedeji highlighted the need for an overhaul of outdated tax laws, such as the Stamp Duty Act of 1939, which was created in an era devoid of modern technology and infrastructure. “President Bola Tinubu’s administration has established the Tax and Fiscal Reform Committee to address these gaps and ensure our tax laws reflect current realities,” he added.
He added that the new tax laws were part of the government’s efforts to align with President Tinubu’s economic agenda, which aims to streamline revenue collection, simplify tax processes, and enhance services across the board.
Dr. Adedeji expressed confidence that these reforms would improve Nigeria’s financial stability and support sustainable development.
He also praised the National Assembly for its continued support of the FIRS, noting that the agency is on track to meet the N19.4 trillion revenue target set for 2024. He credited this achievement to the collaborative efforts between the FIRS and lawmakers, which have strengthened the country’s revenue base and enhanced wealth distribution.
In his remarks, Senator Muhammed Musa, Chairman of the Senate Committee on Finance, underscored the importance of regulating the cryptocurrency industry to ensure proper tax collection and revenue generation. He stressed that updating Nigeria’s legal framework is essential for aligning with global trends, especially as digital currencies continue to reshape financial landscapes worldwide.
“Cryptocurrencies have become a significant source of income for many, yet Nigeria lacks the necessary laws to govern this area,” Senator Musa stated. He expressed optimism that the Executive would submit the appropriate bill once the Senate resumes from recess, allowing for necessary amendments and re-enactments that align with current economic realities.
As Nigeria moves toward regulating its cryptocurrency industry, the forthcoming tax laws are expected to provide a much-needed legal framework that will not only secure the sector but also ensure it contributes meaningfully to the country’s economy.