SEC speaks on regulation cryptocurrency trading, considers taxing crypto transaction

• The Securities and Exchange Commission is currently updating its rules regarding cryptocurrencies
• This is to ensure that the official tax net encompasses all eligible transactions on regulated exchanges
• The SEC acknowledged that a sizable amount of tax revenue will be generated by bitcoin transactions

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

To guarantee that all qualified transactions on regulated exchanges are included in the official tax net, the Securities and Exchange Commission (SEC) is revising its regulations.

SEC acknowledged that a substantial amount of tax revenue will be generated by bitcoin transactions. Photo Credit: SEC, Contributor
Source: Getty Images

In an emailed answer to inquiries, the commission stated in a report published by Bloomberg on Tuesday that it aims to increase revenue by imposing taxes on digital transactions and cryptocurrency trading.

The SEC admitted that bitcoin transactions will generate a significant amount of tax income, but it did not indicate how much revenue it expected to generate.

According to the SEC, it is also broadening the scope of cryptocurrency licensing by granting permits that would enable citizens to trade on official, centralized exchanges where transactions are subject to taxation and monitoring.

“We anticipate gradual traction toward centralized exchanges, because they will provide greater protections and comfort for investors,” the regulator said.

All banks and other financial institutions (OFIs) received operational instructions on virtual assets service providers (VASPs) from the Central Bank of Nigeria (CBN) in December 2023.

The change was a departure from CBN's original stance, which limited bitcoin transactions.

CBN issued a circular in February 2021 directing OFIs, deposit money banks (DMBs), and non-bank financial institutions (NBFIs) to terminate the accounts of individuals or organizations engaged in cryptocurrency transactions on their platforms.

Former Minister of Finance, Budget, and National Planning Zainab Ahmed said in December 2022 that the 2022 finance bill contained provisions to tax digital assets such as cryptocurrencies.

The SEC's director-general, Emonotimi Agama, announced on September 12, 2024, that 50 bitcoin exchanges have applied for operating licenses in the nation.

Nigeria leads African Countries with highest crypto adoption

Legit.ng reported that Amid high inflation and a crackdown by African governments on cryptocurrency platforms, the continent's crypto adoption has experienced massive growth since 2023.

The growth is driven by substantial investments and increased individual interests, facilitating trading across Africa.

A recent report by Chainalysis says Sub-Saharan Africa contributed about 2.7% to the global crypto economy’s transaction volume this year.

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Source: Legit.ng