- Obinna Iwuno, the head of Nigeria’s main blockchain group, criticizes the hurried implementation of the 2023 Finance Act, citing the premature introduction of crypto tax.
- Questioning the logic behind taxing an undefined asset, Iwuno insists on the need for clear regulations and functioning infrastructure before enforcing cryptocurrency taxation.
- Iwuno stresses the need for a united understanding of cryptocurrency among regulatory entities and expresses concerns over the potential stifling effect of taxation on the industry’s growth.
In the wake of the 2023 Finance Act’s enforcement, Obinna Iwuno, the leader of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), questions its feasibility. The Act, signed into effect on May 28, aims to modernize the national fiscal landscape. However, Iwuno voices concerns over one of its components: a 10% tax levy on profits from digital assets, including cryptocurrencies.
During a recent conversation with Cointelegraph, Iwuno objected to the cryptocurrency tax enforcement amidst the current murky climate, comparing it to a cart-horse role reversal. He underscored the persisting conflict, wherein the Central Bank of Nigeria (CBN) forbids commercial banks from handling cryptocurrency transactions.
Iwuno raised the question of how the taxation of an unrecognized and undefined asset could be feasible. He emphasizes the necessity of unambiguous guidelines and a supportive infrastructure before levying taxes. In affirmation of this perspective, he highlighted the Nigerian National Information Technology Development Agency’s (NITDA) effective definition of blockchain technology via national policy formulation and cooperative effort.
Iwuno also pointed out the intersection of security, currency, and technology within cryptocurrency, governed respectively by the Nigerian Securities and Exchange Commission (SEC), the CBN, and NITDA. He emphasized the need for a collective understanding of cryptocurrency by these authorities for effective policymaking, regulation, and taxation.
Regarding whether Nigerian cryptocurrency stakeholders have voiced their concerns to the SEC and CBN, Iwuno confirmed that contact had been made, and a response is eagerly anticipated. While dialogues have begun, concrete decisions are yet to be formed.
While appreciating the government’s intent to expand the tax base, Iwuno warns that hasty taxation measures should not obstruct the nascent cryptocurrency industry’s development. The tax’s implications, its connection to the recognition of cryptocurrency, and the associated procedures require clear elucidation.
According to Iwuno, the observed lack of stakeholder consultation, akin to the e-naira launch, might delay the tax law’s adoption. He suggests that a more collaborative approach with the digital assets ecosystem could have hastened the e-naira’s embrace by countless Nigerians.
Nigeria’s Balancing Act with Cryptocurrency
Navigating a complex regulatory landscape, Nigeria’s relationship with cryptocurrency reflects both progress and challenges in 2023. This dynamic landscape has evolved considerably over the past five years, mirroring Africa’s broader crypto regulatory shifts. In 2021, Nigerian authorities moved to ban Bitcoin, resulting in an unexpected surge of peer-to-peer transactions. Progress came in 2022 when the Central Bank of Nigeria introduced the eNaira, a pilot for a Central Bank Digital Currency (CBDC).
Yet, 2023 brought a controversial twist with the introduction of the Finance Act, which proposes a 10% tax on digital asset gains, including cryptocurrencies. This move, seen by some as premature, sparked criticism from local stakeholders demanding a clearer regulatory framework for cryptocurrency. With discussions underway with key regulatory entities and a consensus on the need for clarity, Nigeria’s cautious engagement with cryptocurrency seeks to balance regulation, taxation, and industry growth.
