Experts weigh in as FG moves to capture $400m crypto market

Experts have expressed divergent views as the federal government is positioning the country to reap from the cryptocurrency ecosystem. The crypto market in Nigeria is estimated to be over $400m, according to the Securities and Exchange Commission (SEC). There has been a back and forth over cryptocurrency regulations with the Central Bank of Nigeria (CBN) […]

Experts have expressed divergent views as the federal government is positioning the country to reap from the cryptocurrency ecosystem.

The crypto market in Nigeria is estimated to be over $400m, according to the Securities and Exchange Commission (SEC).

There has been a back and forth over cryptocurrency regulations with the Central Bank of Nigeria (CBN) banning digital currency transactions.

But the federal government has made a U-turn with a plan to capture the flourishing crypto market.

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The Federal Inland Revenue Service’s (FIRS) Chairman, Zacch Adedeji, revealed over the weekend that an executive bill is being prepared for transmission to the National Assembly, saying that the bill aims to harmonise revenue administration and establish a legal framework for crypto regulations.

“The plan first is to have the law that regulates it and that is why we are here with the legislators which would be the base of charging as it’s done in other places in the world, when you have this new innovation or system, you just have to get ready for it. You can’t go away from it; you just have to plan to regulate it in such a way that it is not injurious to the economic development of Nigeria,” he said.

In an interview with Daily Trust, some of the stakeholders expressed their concerns over the proposed tax.

CEO of Emforex Trading Academy, Emmanuel Ndubuisi, commended the federal government for the proposed tax on crypto traders, describing it as the best practices obtainable in Western countries like the United Kingdom (UK) and the United States of America (USA).

Ndubuisi opined that creating an enabling environment for crypto activities to thrive in the country should be the fulcrum rather than the proposed tax on crypto-traders, citing previous policies aimed at cracking down on their businesses.

“It is not just all about the placement of taxes on the cryptocurrency industry. What are we also going to get or benefit from the federal government as a business? So that is not just about making it look like a one-sided thing, whereby the government is the only one to benefit,” he said.

Olaleye Awe, founder of Alpha Training Lab, stressed that the palpable fear of the government’s restrictions has spurred traders to do business with uncertainty. He urged the federal government to restore confidence in the minds of traders.

 “They need to enact policies that allow more and more people to trade on regulated platforms and not chase away exchanges and make their own jobs more difficult. There’s also a mooted, or should I say pseudo ban on crypto from this same government that seeks to tax crypto gains,” he said.

He urged the federal government to organise a public opinion poll with crypto-traders and establish relationships with them before imposing taxes on their businesses.

 “They ought to consult with the stakeholders, but as usual, everything in Nigeria is always different. We have always known that taxes will be one of the ways the government benefits from the crypto economy.

 “I am curious to know what parameters the government intends to use to arrive at a tax formula for crypto assets and also wonder how they intend to capture transactions outside the confines of exchanges,” he added.

Rume Dominic, the CEO of VOREM, lauded the federal government for the move to introduce a tax on the crypto market, saying it would restore confidence in the minds of investors and increase government revenue.

“Every investor wants security for his investment, and with clear policies like this, we would be able to see that people can make headway. I believe that this move to tax the cryptocurrency transactions and ecosystem could yield a lot of benefits for Nigeria, ranging from increased revenue,” he said.

“Taxing most of these transactions could truly provide a significant boost to the coffers, and it will increase government revenue,” he said.

He, however, urged the federal government to clarify regulating the crypto market, stressing that the sector has the potential to generate economic fortunes for the country.

“Nigeria is at the forefront of this digital revolution in Africa, and by embracing and regulating cryptocurrencies, we can unlock their full potential and pave the way for a more inclusive and prosperous digital economy.

“It is a positive step towards integrating cryptocurrencies into the mainstream financial system and while it might come with some initial challenges, it has long-term benefits in terms of revenue generation,” he said.