Nigeria's Securities and Exchange Commission ( SEC ) is preparing to license issuers of virtual assets, including cryptocurrencies. The announcement comes in response to the growing adoption of these assets in the country, according to a report by Bloomberg.

The SEC aims to issue its initial licenses for digital services and tokenized assets within the coming month, as stated by representatives. This move comes as the Abuja-based regulator addresses the increasing demand for cryptocurrencies in Nigeria. Nigeria is aligning with other nations that have implemented licensing regimes for cryptocurrency companies.

South Africa, the continent's largest economy, recently introduced such a regime. Similarly, France implemented a new regulatory framework earlier this month, while the United Kingdom has been registering companies under its anti-money laundering regulations since 2020, pending the introduction of more specific rules. The country has recently initiated legal action against the cryptocurrency exchange Binance, accusing it of tax evasion and money laundering, with one of the exchange's executives currently in custody on money laundering charges.

Taxing crypto from September 2024 Nigeria's Federal Inland Revenue Service (FIRS) is preparing to introduce a bill to parliament in September that aims to tax cryptocurrency transactions as part of a broader reform of the country’s revenue administration. This proposed legislation represents a significant step towards regulating the growing cryptocurrency industry in Nigeria. One of the key provisions in the proposed tax law is the introduction of a 7.5% value-added tax (VAT) on cryptocurrency transactions.

Experts highlighted the need for clear guidelines on which parts of these transactions would be subject to VAT, suggesting that service charges related to crypto transfers should be taxed rather than the principal amounts transferred. They stressed the importance of distinguishing between taxable profits and transactional amounts to ensure the effective implementation of the tax law. They also addressed the broader impact of the proposed tax law, noting that it is part of a wider initiative to improve domestic revenue mobilization in Nigeria.

They pointed to the role of technology in enhancing tax collection and enforcement, citing advancements that allow authorities to track financial transactions more effectively. Improved data collection mechanisms are seen as crucial to increasing compliance and ensuring the successful application of tax laws. As Nigeria prepares to implement new tax laws on cryptocurrency transactions, the focus will be on effective execution, transparency, and compliance.

The introduction of this tax bill reflects the government's proactive approach to adapting to changes in the financial landscape and strengthening revenue administration. With appropriate mechanisms in place, Nigeria could achieve sustained revenue growth and greater fiscal stability. .