Nigeria Seeks to Regulate Crypto Industry with New Law
In a move to bring clarity and oversight to the rapidly growing cryptocurrency sector in Nigeria, the Federal Inland Revenue Service (FIRS) has announced its intention to seek the support of the National Assembly to enact a law regulating the industry.
Speaking at a stakeholder engagement with the Senate and House Committee on Finance, FIRS Executive Chairman Zacch Adedeji emphasized the need for a comprehensive law to govern the crypto industry. “We cannot run away from cryptocurrency, and as we stand today, there is no law anywhere in Nigeria that regulates cryptocurrency. We cannot run away from it,” he said.
According to Adedeji, the plan is to first establish a law that regulates the crypto industry, which will serve as the basis for charging and taxation. This approach is in line with global best practices, as many countries have similar regulations in place to ensure the efficient collection of taxes and prevent financial loss.
The proposed law is expected to be introduced in September and will aim to overhaul the entire process of revenue administration in Nigeria, harmonizing, recoding, and simplifying the tax laws that currently exist. For example, the Stamp Duty Act of 1939, which was enacted before the advent of the internet, will be modernized to reflect the current digital landscape.
Cryptocurrency platforms have been under intense scrutiny following the exit of Binance, which was accused of manipulating the naira-to-dollar exchange rate by the Nigerian government. In response, Nigeria has already imposed a 7.5% Value-Added Tax on crypto transaction fees, which was announced by cryptocurrency exchange KuCoin and is set to take effect on July 8, 2024.
The Central Bank of Nigeria has also lifted its ban on banks operating accounts for crypto service providers, marking a shift towards a more open but regulated approach that has been welcomed by many local crypto users.
As the crypto industry continues to evolve in Nigeria, the proposed law will help to create a more stable and transparent regulatory framework, ensuring that the country can take full advantage of the benefits that crypto trading has to offer while minimizing the risks and potential negative impacts on the economy.
