Business
FG Lifts Ban On Cryptocurrency, Introduces Taxation Instead
Bitcoin and other cryptocurrencies have long been a topic of debate and regulatory scrutiny worldwide, and Nigeria has been no exception.
In February 2021, the Central Bank of Nigeria (CBN) issued a circular to deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs) to close accounts of persons or entities involved in cryptocurrency transactions within their systems.
The CBN further warned local financial institutions against dealing in crypto-assets or facilitating payments for crypto exchanges.
The apex bank cited concerns over money laundering, terrorism financing, cybercrime and the volatility of cryptocurrencies as reasons for the ban.
The directive received significant backlash from the Nigerian public and the cryptocurrency community, as many saw it as a hindrance to technological advancement and economic growth.
However, just two years later, the government has taken a surprising turn by introducing taxation on cryptocurrencies.
Here is a timeline of major events in the two-year period that shaped the evolution of Nigeria’s stance on cryptocurrencies.
February 5,2021: CBN directs banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems.
February 9, 2021: CBN launches investigation into financial institutions offering services to cryptocurrency traders.
February 11, 2021: The senate invites the CBN, the Securities and Exchange Commission (SEC) to discuss opportunities and threats of cryptocurrency on Nigeria’s economy and security.
February 18, 2021: The International Monetary Fund (IMF) backs CBN, says cryptocurrencies may be used for illegal activities.
February 22, 2021: The SEC says there is a need to regulate cryptocurrencies.
February 26, 2021: Yemi Osinbajo, Vice President of Nigeria, calls for a regulatory framework for cryptocurrencies rather than an outright ban.
March 21, 2021: The CBN clarifies its position on the ban and states that individuals are not prohibited from buying and trading crypto, just not through any Nigerian bank or fintech.
April 15, 2021: SEC says discussion is ongoing with the CBN over the regulation of cryptocurrencies.
April 26, 2021: The Economic and Financial Crimes Commission (EFCC) warns Nigerians to be cautious before investing in Bitcoin.
July 22, 2021: The CBN announces plans to launch the “ eNaira”—a central bank digital currency (CBDC) — which is quite different from Bitcoin and other cryptocurrencies.
October 25,2021: Nigeria becomes first African nation to launch a digital currency — the “eNaira”.
April 7, 2022: CBN hits six banks with a N1.3 billion fine over alleged non-compliance with its regulation on accounts of cryptocurrency traders.
May 15, 2022: The SEC recognises digital assets as securities and issues regulations on exchange and custody of cryptocurrencies in the country.
INTRODUCTION OF TAXATION ON CRYPTOCURRENCY
The federal government surprised many by announcing its decision to tax cryptocurrencies.
The government said it recognised the growing adoption and economic significance of digital assets and aimed to harness their potential for revenue generation.
By doing so, Nigeria joins the league of jurisdictions currently taxing digital assets, including the United Kingdom, the United States of America, Australia, India, Kenya and South Africa.
December 2, 2022: Zainab Ahmed, minister of finance, budget and national planning, says there is a provision to tax cryptocurrency and other digital assets in the latest finance bill.
May 28, 2023: President Muhammadu Buhari signs the 2023 finance bill into law. The law introduces a 10 percent taxation of gains on the disposal of digital assets including cryptocurrency. The law is effective as of May 1, 2023.
The Basic Metal, Iron and Steel Products Manufacturer, a sectoral arm of the Manufacturer Association of Nigeria, (MAN) has commended President Ahmed Bola Tinubu for his overwhelming performances and efforts towards the nation’s economic growth at the just concluded Nigeria-India economic roundtable meeting in India.
The group also commended the president for attracting the sum of $14 billion investment to boost the nation’s economy adding that the feats recorded by the Bola Tinubu-led government within 100 days of its inauguration will no doubt accelerate economic recovery and business growth in the steel sector.
This is contained in a statement issued on Sunday by the Chairman of the group, Dr. Kamoru Yusuf MON, stressing that, “Iron and Steel sector, if given the required attention and necessary support, is capable of ensuring accelerated growth of the nation’s economy.
Dr. Yusuf, who is also the Group Managing Director of KAM Holding Limited, a wholly owned indigenous Iron and Steel Industry in Nigeria added that, “President Tinubu has by all standards demonstrated his love and readiness to support industrialists. We, in the Iron and Steel sector of the Manufacturers Association of Nigeria, (MAN) are ready to support his administration with data, workable templates and roadmaps that will support Mr. President in his endeavour to succeed in his mandates to Nigerian citizens.
“As major stakeholders in Nigeria’s Project, we received this news with huge excitement and sense of fulfillment and hope that the breakthrough will further change the game of operations as ‘Risk Takers’ in the nation’s business environment. We pledge our unalloyed support to your administration towards ensuring and providing enabling atmospheres for industrialists to continue to thrive.”
The statement also emphasised that, “President Tinubu’s exceptional efforts in attracting such a substantial investment for Nigeria’s steel sector deserves standing ovation and applause.”
The group therefore promised to continue to support the Minister for Steel Development, Alhaji Shuaibu Audu, in the discharge of his duties at all times.
Dr Titus Okunrounmu, former Director, Budgetary Department at the Central Bank of Nigeria (CBN), has advised the Federal Government to reduce the cost of governance in order to stem the country’s debt profile.
Okunrounmu, who gave the advice while speaking with the News Agency of Nigeria (NAN) on Thursday in Ota, Ogun, described the list of ministerial portfolio on Wednesday as over bloated for a country with huge debt profile.
According to him, funding the nation’s recurrent budget with borrowing does not need these large number of ministers and bloated special assistants, which inevitably must allow for allowances and official vehicles.
“These excess baggage was not projected for in the 2023 Federal Budget and the revenue estimates could not cover the recurrent budget.
“In addition, the federal government needs financial discipline to curb corruption in the Ministries, Departments and Agencies (MDAs) to reduce debt profile in the country,” he said.
Okunrounmu advised the federal government to redouble its efforts and work against policy somersault to encourage influx of foreign investors into the country.
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