The Central Bank of Nigeria (CBN) has partnered with the Nigerian SEC to create a regulatory framework for digital assets.
The country aims to address the growing influence of cryptocurrencies and blockchain technology, with CBN placing a high importance on establishing clear guidelines for the sector.
Regulations and taxes on crypto
CBN aims to ensure that all different regulatory authorities can collaborate and create a sustainable process for digital currencies. The goal is to establish a robust regulatory environment for crypto that aligns with global standards while addressing global concerns.
The alliance reflects the growing number of crypto-related activities in Nigeria, a country that has gained significant traction in the industry. The central bank acknowledges the importance of crypto in shaping the future of financial policies, yet the full impact of digital assets is uncertain. This is why the central bank wants to balance development with the need for customer protection and financial stability.
Along with regulatory guidelines, Nigeria also introduced new taxation rules for digital asset transactions. The SEC is working on a bill that would require crypto transactions to be taxed, as the industry could contribute significantly to the country’s tax revenue. The bill is projected to be passed in the near future. By regulating and taxing crypto transactions, the government aims to create a sustainable environment for digital assets to thrive within legal parameters.
Although the country is making positive progress, traders are still facing challenges in executing transactions due to various legal and security issues. Police have been reported to seize assets and demand fines from individuals involved in crypto activities, causing anxiety among traders.
Additionally, another challenge faced by the SEC and CBN is creating an environment that encourages innovation while ensuring safety and security. The regulator’s goal is to create clear regulations that support both the growth of digital assets and the protection of consumers from fraud and illegal activities. Back in 2021, the bank imposed a controversial ban on institutions offering solutions to crypto-related businesses over money laundering and terrorism financing concerns.
However, the ban was lifted in 2023 as CBN issued guidelines for financial institutions regarding their collaboration with VASPs. Despite the ban’s removal, some traders have reported difficulties in carrying out transactions, citing issues such as police harassment and persecution. These concerns have affected the overall adoption of crypto in Nigeria, with many individuals still wary of engaging in crypto-related activities openly.
