The federal government of Nigeria’s plan to tax cryptocurrency transactions under the Nigeria Tax Administration Act (NTAA) is triggering growing concern among blockchain stakeholders, who fear the policy could push traders away from licensed exchanges and reignite massive peer-to-peer (P2P) trading.
Industry players warn that a mix of new tax obligations, heavy compliance requirements, and unresolved regulatory gaps may undermine the government’s goal of formalising the sector when the NTAA takes effect in January 2026.
The Act imposes strict rules on Virtual Asset Service Providers (VASPs), including mandatory registration with the Federal Inland Revenue Service (FIRS), seven-year KYC record retention, and compulsory reporting of large or suspicious crypto transactions to both the tax authority and the Nigerian Financial Intelligence Unit (NFIU).
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Failure to comply attracts a ₦10 million penalty for the first month and ₦1 million for every additional month, with the Securities and Exchange Commission (SEC) empowered to suspend or revoke licences.
According to the NTAA, taxable virtual asset transactions include sales, transfers, mining or staking rewards, airdrops, bounties, and crypto payments for goods and services—treated the same as fiat-based transactions.
Rising compliance costs may fuel P2P migration
Industry experts say the increased reporting obligations will burden retail traders, who form the majority of Nigeria’s crypto market.
Convener of Lagos Blockchain Week, Chukwuemeka Enoch Mbaebie, told Fintech Insights that mandatory NIN/TIN-linked KYC and quarterly reporting requirements may discourage traders who depend on centralised exchanges.
He warned that the new rules “could deter retail traders” and trigger a resurgence of unregulated P2P trading as users seek to avoid direct oversight and potential tax exposure. Such a shift, he added, could complicate government efforts to curb capital flight and illicit crypto flows.
Critics fear an expanded underground crypto market
President of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), Obinna Iwuno, echoed similar concerns, noting that the new tax may accelerate the migration to P2P platforms similar to the exodus seen when some exchanges introduced a 7.5% VAT.
Iwuno argued that the tax regime is arriving too early, given Nigeria’s lack of a fully developed crypto licensing system.
“The tax regime will chase a lot of traders to P2P, which is not a market we should encourage to thrive,” he said, adding that stronger licensing would empower compliant exchanges to police the market and report illegal operators.
Licensing gaps may weaken tax enforcement
A major concern is that the NTAA is being implemented before Nigeria fully regularises its crypto market.
Currently, only Quidax and Busha hold SEC Approval-in-Principle licences under the Accelerated Regulatory Incubation Program (ARIP). No exchange has received a full operational licence, leaving many operators in limbo.
Iwuno emphasised that enforcement will remain weak unless the SEC expands licensing, accelerates ARIP processing, and adopts a tiered licensing model.
A call to grow the crypto industry not shrink it
Stakeholders argue that Nigeria should prioritise enabling the crypto sector before imposing taxes.
Iwuno called for tax incentives or holidays, noting that Nigeria despite ranking among the world’s top crypto adopters still lacks comprehensive regulation.
“The government should be looking at ways to expand the industry so it becomes the biggest gainer in the long run,” he said.
Recall that in August 2024, SEC granted AIP to Quidax and Busha which ae the only two approved exchanges to date. Several firms awaiting ARIP approval have seen no progress for over a year. SEC leadership cited unresolved issues from the first round of licences as the reason for delayed approvals.
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