Virtual Asset Service Providers (VASPs) in Nigeria who neglect to adhere to the stipulations of the country’s newly enacted tax legislation will incur a starting fine of ₦10 million (approximately $6,693) for the first month of non-compliance, followed by a monthly penalty of ₦1 million ($669) thereafter. Additionally, the Securities and Exchange Commission (SEC) holds the authority to suspend or revoke their operating licences, as outlined in the Nigeria Tax Administration Act, 2025 (NTAA), which is slated to be enforced beginning in 2026.
Enacted in June 2025, this legislation forms part of a comprehensive reform agenda aimed at revamping Nigeria’s fiscal policies and enhancing government revenue streams. Since the December 2023 repeal of the banking ban on crypto services, the government has maintained a cautious stance toward the cryptocurrency sector, citing concerns over the naira’s instability, firs-e-invoicing-onboarding/” title=”More Than 4,000 Large Taxpayers Still Lagging Behind on … E-Invoicing System Onboarding – Official Warns”>tax evasion, and potential links to illicit financing. Nevertheless, the administration now seeks to leverage this sector to elevate the nation’s tax-to-GDP ratio from below 10% to an ambitious 18% by 2027.
Regulatory and Taxation Developments in Crypto
In March 2024, the SEC officially classified VASPs into categories such as cryptocurrency exchanges, peer-to-peer (P2P) platforms, and over-the-counter (OTC) trading desks. Concurrently, it proposed increasing the minimum paid-up capital requirement for these entities from ₦500 million ($334,669) to ₦1 billion ($669,339).
By July 2024, KuCoin, an international cryptocurrency exchange, announced it would implement a 7.5% value-added tax (VAT) on transaction fees to align with the Federal Inland Revenue Service (FIRS) regulations and avoid disputes similar to those experienced by Binance in Nigeria.
In August 2024, the SEC issued provisional licences to platforms such as Quidax and Busha. Around this period, FIRS chairman Zacch Adedeji indicated plans to draft comprehensive legislation aimed at reforming revenue collection mechanisms, explicitly including the crypto sector.
“We require legislation that governs this segment of our economy. Our engagement with lawmakers is focused on crafting regulations that support Nigeria’s economic growth rather than hinder it,” Adedeji remarked.
By March 2025, the Investment and Securities Act (ISA) 2025 was enacted, officially recognizing virtual and digital assets as securities. This act brought VASPs, Digital Asset Operators (DAOPs), and Digital Asset Exchanges (DAXs) under the regulatory umbrella of the SEC.
Cryptocurrency as a Tax Revenue Stream
Nigeria ranks among the world’s largest cryptocurrency markets, with transaction volumes reaching $92.1 billion between July 2024 and June 2025. Although the Finance Act of 2022 introduced a 10% tax on profits derived from digital assets, including cryptocurrencies, the measure failed to generate the expected revenue.
The NTAA now mandates that any individual or entity involved in virtual asset activities-such as trading, exchange, custody, or issuance-must register as a VASP with the appropriate tax authority for taxation purposes.
“Any VASP that does not comply with the provisions of this Act will be subject to an administrative penalty of ₦10,000,000 for the initial month of default,” the legislation states.
The NTAA acknowledges the SEC’s role in licensing and regulation but clearly defines taxable transactions, encompassing the sale, exchange, or transfer of virtual assets.
Income generated from mining or staking, rewards such as airdrops and bounties, and any virtual asset received as compensation are also taxable under the new law.
“Transactions where payment for goods and services is made using virtual assets shall be treated equivalently to those conducted in fiat currency; the value of goods and services will be determined by the prevailing market price at the time of the transaction, and the recipient must report such income and remit taxes accordingly,” the Act specifies.
Beyond taxation, VASPs are now obligated to report significant or suspicious transactions to both tax authorities and the Nigerian Financial Intelligence Unit (NFIU), among other compliance requirements.
“They must maintain precise customer records to satisfy Know Your Customer (KYC) protocols and retain all transaction and identification data for a minimum of seven years following the last transaction,” the regulations mandate.
“We are essentially being regulated like banks, with stringent oversight,” commented an anonymous crypto industry insider.
While the exact tax rate on profits remains unspecified, legal expert Senator Ihenyen, lead partner at Infusion Lawyers, notes that the legislation aims to elevate the prominence of digital assets for both economic growth and national security.
This approach aligns Nigeria with other African nations such as Kenya, which imposes a 10% excise duty, and South Africa, where crypto earnings can be taxed up to 18%. For crypto businesses, these new tax laws translate into increased regulatory scrutiny and compliance obligations.
“Effective regulation and monitoring will simplify tax compliance,” said Chimezie Chuta, founder and coordinator of the Blockchain Nigeria User Group. However, for end-users, the introduction of VAT and other taxes may lead to higher transaction costs as service providers pass these expenses on.
The full implementation of these tax reforms is expected in 2026, coinciding with intensified government efforts to counteract declining fiscal revenues. “Paying taxes is a mandatory responsibility for companies operating in Nigeria,” emphasized Dare Adekanmbi, special adviser on media to FIRS executive chairman Zacch Adedeji.
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