Nigeria Stocks Surge as Crypto Taxes Spark Debate

Nigeria has recently introduced new cryptocurrency tax policies aimed at boosting its economy, but experts are skeptical about their effectiveness. In February, the country took legal action against Binance for unpaid taxes and implemented new cryptocurrency taxations. Nigeria, the 53rd largest economy globally, is expected to have the highest average GDP growth between 2010 and 2050. However, recent economic challenges have led the government to introduce significant tax reforms and other measures.

The Nigerian government believes that pursuing unregulated crypto exchanges like Binance could generate over $81 billion in revenue. This is supported by the introduction of a tax on cryptocurrency transactions. However, Nic Puckrin, founder of The Coin Bureau, argues that this tax may not be a straightforward solution. He points out that Nigeria has one of the largest markets for retail over-the-counter (OTC) trading, and importers often use crypto to manage volatile exchange rates, making it difficult for the government to collect taxes.

Nigeria is home to Africa’s largest cryptocurrency market, with about 22% of its population, or 47 million people, owning or using crypto assets. Since lifting its ban on digital currencies in 2021, the Nigerian government has been proactive in responding to the growth and adoption of cryptocurrencies. The Securities and Exchange Commission (SEC) issued its Rules on Digital Assets in 2022, recognizing crypto as securities and providing guidelines for exchanges and custodians. The government has also initiated legal proceedings against Binance, seeking to compel the exchange to pay $81.5 billion for economic losses and $2 billion in back taxes.

The government’s 2023 National Blockchain Policy aims to integrate blockchain into public services, signaling a long-term commitment to crypto. The Central Bank of Nigeria’s eNaira, Africa’s first Central Bank Digital Currency (CBDC), and fintech startups like Flutterwave and Chipper Cash have expanded financial inclusion, reaching 64% of adults in 2023. Maksym Sakharov, co-founder and board member of WeFi, notes that Nigerian regulators understand the country’s role in the global cryptocurrency industry. However, he cautions that the country’s poor implementation of market-changing policies due to high levels of corruption could hinder the effectiveness of these tax measures.

Nigerians primarily use peer