I. Introduction

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In February 2024, Nigerian authorities detained two Binance executives—Tigran Gambaryan and Nadeem Anjarwalla—drawing widespread global attention. The incident stemmed from the government's accusation that Binance had facilitated over USD 26 billion in transactions of "insufficiently identifiable origin" in 2023. These transactions were suspected of money laundering, exchange-rate manipulation (contributing to the depreciation of the naira, Nigeria's legal tender), and tax evasion. The Nigerian government pressured Binance to pay massive fines and demanded disclosure of its top 100 users in Nigeria along with six months of transaction history. At the time, this episode was widely interpreted as a sign of Nigeria's hostility toward crypto assets.

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However, as the crypto market rapidly evolved, Nigeria's stance shifted from stringent restrictions to gradual acceptance, with regulatory frameworks and tax policies adapting in parallel. Regulators sought to establish a robust legal framework to safeguard financial stability and investor protection, while tax authorities began incorporating crypto assets into the tax base to prevent erosion. According to Chainalysis's 2024 Geography of Cryptocurrency Report, Nigeria ranks highest in Africa's Crypto Adoption Index. The evolution of its regulatory and tax policies therefore holds significant research value. This paper examines Nigeria's latest legal instruments and regulatory developments to analyze the taxation of crypto assets, focusing on income tax, value-added tax, and related levies, while situating these within the broader regulatory framework.

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II. Nigeria's Regulatory Framework for Crypto Assets

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Nigeria's regulatory regime for crypto assets has emerged from a delicate balance between the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC). Through legislation and policy instruments, the two institutions have developed a hybrid system: the SEC holds statutory authority to regulate and license crypto-related businesses, while the CBN ensures financial stability and compliance through the banking sector.

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The CBN's position is rooted in the Central Bank of Nigeria Act 2007, which grants it the sole authority to issue currency, thereby denying legal tender status to other virtual assets. In line with this, the CBN issued a circular on February 5, 2021, prohibiting banks and financial institutions from engaging in crypto-related activities, including account opening, payment processing, and collaboration with exchanges, and mandating the closure of identified accounts. Yet, global regulatory trends soon prompted a shift. In December 2023, the CBN released Guidelines on Operations of Bank Accounts for Virtual Asset Service Providers (VASPs). Subject to SEC registration, banks were permitted to open accounts for VASPs under conditions covering AML/CFT compliance, consumer protection, and risk management. This marked a transition from outright prohibition to conditional acceptance, integrating the crypto industry into the formal financial system.

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Meanwhile, the SEC had been working since 2020 to construct a regulatory pathway for digital assets. In September 2020, it declared that virtual assets would be treated as securities, publishing draft rules covering issuance platforms, custody, and trading. Though initially hindered by the CBN's ban, the SEC formally released its Rules on Issuance, Offering Platforms and Custody of Digital Assets in May 2022. These rules:

-Defined "digital assets" as securities and brought them under the Investment and Securities Act 2025 (ISA 2025).

-Required issuers of Initial Digital Asset Offerings (IDAOs), as well as operators of trading platforms and custodians, to register with the SEC.

-Created a separate licensing category for Digital Asset Custodians, subject to capital adequacy, internal controls, segregation of client assets, disclosure, and audits.

-Introduced a regulatory sandbox for fintech innovation.

-Mandated AML/CFT programs including KYC, suspicious transaction reporting, and record-keeping, in alignment with the 2022 SEC Anti-Money Laundering and Counter-Terrorism Financing Regulations.

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It is important to note that in Nigeria, "digital assets" and “crypto assets" are often used interchangeably, though with subtle differences in official definitions. "Digital assets" serve as a broader category encompassing various tokens (including crypto assets). For example, the SEC's 2020 statement classified digital assets into four types, one of which was crypto assets. In the 2022 rules, "virtual assets" were defined as digitally transferable representations of value used for payment or investment, excluding fiat currency or traditional securities—thus covering Bitcoin and similar cryptocurrencies. By contrast, "digital assets" were defined as tokens representing equity, debt, or other claims on an issuer. In practice, crypto assets are understood as exchange media or investment vehicles, while digital assets more often refer to tokenized securities.

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III. Tax Treatment of Crypto Assets in Nigeria

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Although Nigeria's regulatory framework has become clearer, tax rules specific to crypto assets remain under development. The Federal Inland Revenue Service (FIRS) has not yet issued comprehensive guidance, but the Finance Act 2023 and the Nigeria Tax Law 2025 have explicitly brought digital assets into the tax net. Accordingly, treatment relies on general tax principles and regulatory classifications. This section reviews income tax, value-added tax (VAT), capital gains tax, and other taxes.

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1. Income Tax

Nigeria applies both residence-based and source-based taxation. Residents are taxed on worldwide income, and non-residents on income sourced in Nigeria. This principle extends to crypto asset income. Individuals face progressive rates ranging from 7% (income below ₦300,000 annually) to 24% (above ₦3.2 million), while corporate income is taxed at 30%.

Payment tokens (e.g., Bitcoin): Though not legal tender, payment tokens are treated as assets or property. Gains realized on disposal are taxable. Occasional transactions may be subject to capital gains tax, while frequent trading can be reclassified as business income and taxed at corporate rates.

Security tokens: Security tokens mirror traditional securities and are regulated as such. Proceeds from issuance (e.g., STOs) are treated as capital, not income. Dividends and interest earned by investors are taxable (with 10% withholding on dividends). Gains on disposal are subject to 10% capital gains tax. Overall, security tokens follow the same tax treatment as conventional securities.

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2. Value-Added Tax (VAT)

VAT in Nigeria is levied at 7.5% on taxable services provided domestically, unless exempted. Since 2020, amendments to the Finance Act have broadened "services" to include digital and intangible services. Crypto services are not exempt; thus, fees such as exchange commissions are subject to VAT, though the underlying transfer of tokens is not.

FIRS confirmed in 2024 that platforms must charge 7.5% VAT on service fees. For example, if a user trades Bitcoin on an exchange, the commission charged is VAT-able, but the Bitcoin price itself is not.

A gray area arises when crypto is used as payment for goods or services. The goods/services remain VAT-able based on their nature, regardless of payment method. For instance, purchasing a computer with Bitcoin requires VAT at 7.5% on the computer's value. Pure token transfer services might qualify as VAT-exempt financial services, but this remains unsettled in practice.

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3. Capital Gains Tax

The Finance Act 2023 amended the Capital Gains Tax Act to explicitly include digital assets. Net gains from disposal of such assets (cryptocurrencies, NFTs, options, etc.) are taxed at 10%. Taxpayers may offset capital losses, though detailed rules on basis calculation—especially for mined or airdropped tokens—await FIRS guidance.

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4. Other Taxes

Nigeria currently imposes no wealth tax, inheritance tax, or specific excise on crypto. Stamp duties may apply to bank transfers, but not peer-to-peer token transfers. Importantly, FIRS is ramping up enforcement, using blockchain analytics and requiring detailed record-keeping. Unregistered exchanges have faced crackdowns since 2024, signaling a tough stance against evasion.

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IV. Conclusion

Nigeria's approach to crypto assets is evolving dynamically. From early prohibition to a structured regulatory framework, the government is seeking a balance between innovation, risk management, and equitable taxation. The CBN and SEC have delineated supervisory roles, while the Finance Act 2023 introduced explicit taxation of digital assets.

At present, taxation focuses on capital gains and VAT: disposals of digital assets are taxed at 10%, while service fees on platforms are taxed at 7.5%. Yet detailed FIRS guidance is still lacking, leaving gaps in practice.

Looking ahead, Nigeria's trajectory will serve as a valuable case study for other emerging markets. As international norms solidify and domestic experience matures, Nigeria's crypto tax regime is expected to grow more refined, striking a better balance between fostering innovation and ensuring fiscal fairness.