New tax rules could hit Nigeria's $92 billion digital asset market, coalition warns

The Digital Assets Coalition has warned that Nigeria's virtual asset economy, valued at $92 billion, could face reduced investment and slower expansion under the new tax rules introduced by the Nigeria Revenue Service (NRS). The group says transaction-based charges in the new Guidelines on the Taxation of Virtual Assets could raise the cost of participating in the sector, discourage innovation and weaken its contribution to the digital economy.

Speaking at a media parley in Lagos on Thursday, the Coalition's spokesperson, Mr Obinna Iwuno, said the tax structure could have unintended consequences for a sector that has become a key channel for global payments, remittances, savings and income generation, especially among young Nigerians.

What they are saying

Iwuno said the group supports taxation but is concerned about the design of the charges. He warned that the structure could push economic activities offshore.

"We support the taxation of virtual assets without qualification. Our concern is with a design choice that taxes the movement of money itself," he said.

"This charge falls on a remittance to a student abroad, on a freelancer converting earnings already taxed as income, and on a trader in a year they lost money. That is not a tax on profit; it is a toll on participation."

The Coalition, an alliance of digital asset participants and operators, said Nigeria's virtual asset market is the largest in Sub-Saharan Africa and has grown into a significant part of the emerging digital economy. Iwuno noted that the sector has created new opportunities for Nigerians to access cross-border payments, freelance income channels and alternative financial tools amid economic challenges.

He warned that placing additional costs on transactions rather than actual profits could push users and businesses away from regulated domestic platforms, reducing transparency and limiting government revenue from sustainable taxation.

"The people who built this market are largely young Nigerians using it as working infrastructure for global earnings and savings. You cannot tax your way into the future by taxing the people building it," he said.

Contentious provisions

Iwuno raised concerns over provisions that apply taxes to the gross value of transactions, regardless of whether a user records profit or loss. He identified the 1.5% stamp duty on every conversion between naira and digital assets and the 1% withholding tax on the total value of every sale as measures that could increase costs for businesses and individual users.

According to him, a system that taxes transaction volumes instead of realised gains could discourage legitimate economic activities and make Nigeria less attractive to digital asset investors. The impact would be more significant for small users who conduct frequent low-value transactions, as charges could accumulate even where there are no meaningful financial returns.

"The objective of tax policy should be to expand the tax base, not shrink economic participation. A system that drives activity away from regulated channels will ultimately reduce the revenue opportunities available to government," Iwuno said.

He also criticised the requirement for taxpayers to remit taxes in digital tokens, arguing that it conflicts with the Nigeria Tax Administration Act, 2025, which provides for tax payments in currency. He noted that other countries with similar transaction-based tax models had experienced reduced trading activity and a shift of users to offshore platforms.

Call for a review

Iwuno urged policymakers to consider the long-term economic implications of the framework and adopt a model that balances revenue generation with market growth. He called for a review of the guidelines, wider consultation with industry participants, and a tax structure that focuses on actual profits, protects smaller users and allows Nigeria's virtual asset industry to keep contributing to economic growth.

"This is not a fight against taxation. It is a request for a design that works for citizens and the Revenue Service alike. A workable framework will help government generate revenue while ensuring that innovation, investment and economic opportunities are not pushed away from Nigeria," Iwuno said.

Nairametrics earlier reported that the new guidelines have triggered debate among cryptocurrency investors, traders and industry stakeholders. Some warn that excessive taxation could discourage innovation, while others welcome the clarity provided by the framework. Some users also questioned whether airdrops should be subject to taxation, while others argued that the guidelines clarify how existing tax obligations apply to digital assets.

The guidelines came weeks after President Bola Tinubu signed the Presidential Executive Order on Virtual Assets Coordination, 2026, establishing a coordinated regulatory framework for cryptocurrencies, stablecoins, tokenised assets and other digital financial products.

For Nigerian businesses and the naira, the coalition's warning points to a real risk: if activity moves offshore, the government may lose both tax revenue and oversight of a market that many young Nigerians rely on for global earnings and savings.