In a surprising turn of events, the Nigerian government has lifted the ban on cryptocurrency and introduced a new approach by implementing taxation on digital assets. This decision marks a significant shift in the country’s stance on cryptocurrencies, which had been met with controversy and criticism.
The ban on cryptocurrency was initially imposed in February 2021 by the Central Bank of Nigeria (CBN). The CBN instructed financial institutions to close accounts associated with cryptocurrency transactions, citing concerns over money laundering, terrorism financing, cybercrime, and the volatile nature of cryptocurrencies.
However, after facing public backlash and recognizing the potential economic benefits of digital assets, the government has now opted for a taxation approach. This move aligns Nigeria with other countries, including the United Kingdom, the United States, Australia, India, Kenya, and South Africa, that have implemented taxation on cryptocurrencies.
The timeline of events leading up to this decision sheds light on the evolution of Nigeria’s position on cryptocurrencies. From discussions between the CBN, Securities and Exchange Commission (SEC), and the Senate to the launch of the eNaira, Nigeria’s central bank digital currency, various developments influenced the government’s perspective.
On December 2, 2022, Zainab Ahmed, the Minister of Finance, Budget, and National Planning, revealed plans to tax cryptocurrencies and digital assets in the finance bill. Finally, on May 28, 2023, President Muhammadu Buhari signed the 2023 finance bill into law, officially implementing a 10 percent tax on gains from the disposal of digital assets, including cryptocurrencies, effective from May 1, 2023.
This decision signifies a shift towards embracing the potential economic opportunities presented by cryptocurrencies while ensuring appropriate regulation and revenue generation. It remains to be seen how this taxation framework will impact the cryptocurrency landscape in Nigeria and how it will be received by the cryptocurrency community and investors.
