Advertisement

Is Cryptocurrency Legal In Nigeria? All the Facts

Advertisement

Is Cryptocurrency Legal In Nigeria: Cryptocurrency may be growing in popularity across the globe, but users need to understand the legal implications of trading or investing in digital currencies before getting involved.

In Nigeria, the government has established regulations to control cryptocurrencies, making it important for investors and traders to understand what is allowed and what is not.

Current State of Cryptocurrency Regulations in Nigeria

As of January 2020, cryptocurrencies are not legally recognized as a currency or legal tender in Nigeria. Trading and investing are still allowed, but services such as exchanges and digital wallet providers must register with the Central Bank of Nigeria as Money Services Businesses (MSBs).

Furthermore, dealing with cryptocurrencies is subject to tax, although it’s outside the scope of value-added tax (VAT). All Nigerian banks, on their part, are required to monitor customer activities related to cryptocurrency trading.

Advertisement

Taxation and Payment Systems Act of 2020 Defines Crypto Assets

In 2020, the Taxation and Payment Systems Act of Nigeria was passed to provide legislation and guidance on cryptocurrencies. The act made it possible for Nigerians to hold cryptocurrency assets and use them in financial transactions. It also introduced a simple tax requirement on activities related to crypto trading.

For now, Nigerian digital currency holders must pay a flat 7.5% capital gains tax on all their crypto profits. This includes short-term and long-term investments in crypto assets such as Bitcoin, Ethereum, Bitget coin, other altcoins, stablecoins, and non-fungible tokens (NFTs).

Banking Sectors Vs Cryptos: What the Regulations Say?

The regulations governing crypto in Nigeria also affect its relationship with traditional banking institutions. The Central Bank of Nigeria (CBN) has issued a number of guidelines to financial institutions that are allowing or blocking related transactions on their networks. Banks have been encouraged to carry out due diligence checks before allowing customers to transact in cryptocurrencies, and those customers will require up-to-date identification papers. In addition, banks are not allowed to use cryptocurrencies themselves, nor offer services related to them such as storage or trading.

Are Any Nigerian Laws Forbidding Digital Currency?

As at the time of writing this article, there are no laws or regulations in Nigeria that forbid the use or trading of cryptocurrencies. Indeed, Nigeria’s Securities and Exchange Commission (SEC) has recently made clear that digital currencies are not considered securities and therefore cannot be subject to SEC regulation. That said, the SEC recommends that investors exercise caution when it comes to investing in cryptocurrencies. The Central Bank of Nigeria also advises against using them for payment purposes since they are not yet legal tender in the country.

What this Means for All Crypto Enthusiasts

The lack of an official legal framework for cryptocurrencies in Nigeria does not mean that trading and usage of these digital assets is completely unrestricted. In order to ensure the safety of investors, the SEC recommends that individuals engaging in cryptocurrency investments do so with a licensed financial institution or otherwise legally authorized party.

Furthermore, individuals should also conduct their own due diligence when it comes to any activities involving digital currencies. Finally, all crypto enthusiasts should be aware that the Nigerian government has declared its intentions to introduce new regulations governing digital currencies in the near future.

Advertisement

What Is Nigeria Government Saying About Cryptocurrency?

What Is Nigeria Government Saying About Cryptocurrency

The Regulatory body of Nigeria’s Capital Markets has enacted new legislation governing the issuance, exchange, and custody of digital assets in the country. This comes 20 months after it declared its intention to define and deal with issues concerning digital assets.

The Securities and Exchange Commission of Nigeria (SEC), in cooperation with the Central Bank of Nigeria (CBN), prohibits Nigerian financial institutions from doing business with cryptocurrency-related companies. But now, token issuance platforms and exchanges must set up escrow accounts with receiving institutions under the new SEC requirements.

The Nigerian SEC has granted licenses for Virtual Asset Service Providers (VASPs) to operate in the country. VASPs must also apply anti-money laundering and anti-terrorist financing (AML/CFT) standards.

Does Nigeria Tax Cryptocurrency?

As of the time of writing this article, the Nigerian Government has not started taxing cryptocurrency.

Advertisement

The Government of Nigeria announced that if its 2022 Finance Act is passed, it will tax cryptocurrencies and other digital assets in 2023. According to the bill’s amendment to the section on Chargeable Assets, “subject to any exceptions provided by this Act, all types of property shall be assets for this Act whether or not located in Nigeria, including options, debts, Digital Assets, and incorporeal property in general.

Despite having one of the highest crypto adoption rates, Nigeria has a problematic relationship with cryptocurrencies. In the year 2021, there was an order by the Central Bank of Nigeria to the Nigerian banks to close the accounts of cryptocurrency traders or other entities involved in transactions using its systems. The Central Bank of Nigeria warned that they were used to fund illegal activities and fined banks that facilitated crypto-related transactions.

The Securities and Exchange Commission in Nigeria (SEC) made an announcement that it would be pushing for “sensitive digital assets, not cryptocurrencies,” to encourage the adoption of digital assets across the country.

Despite the government’s tough stance on cryptocurrencies and its harsh treatment of cryptocurrency users, the proposed bill does not exempt cryptocurrencies from taxation as digital assets.

The ministry of finance wants to tax cryptocurrencies and other digital assets to capture all economic sectors, including international e-commerce, into the tax net.

The National Economic Council (NEC) has given the green light to the bill. It is now on its way to the Federal Executive Committee, the President, and the National Assembly for assessment. If approved, Nigeria, Kenya, and South Africa will be one of the African countries taxing crypto assets.

Which Cryptocurrency Work In Nigeria?

As a Nigerian resident, you can buy all cryptocurrencies listed on cryptocurrency exchanges. All cryptocurrencies, including Bitcoin, Binance coin, Ethereum, Bitget, etc., can be purchased in several cryptocurrency exchanges like Binance, Bitget, and Okx.

Just make sure you research any cryptocurrency you are interested in to invest your money in viable cryptocurrencies.

How Do Nigerians Make Money From Crypto?

“How can Bitcoin make me money in Nigeria in 2023? This could be one question in your mind, and you will get answers in this article.

Bitcoin is a digital currency that has grown in popularity in recent years. Also referred to as a cryptocurrency, it operates independently of any central bank or government. Simply put, digital money can be sent and received electronically, much like you would send and receive money through your bank account.

Now talking about Nigeria. As you may already know, Nigeria is a West African country with over 200 million people. In recent years, interest in Bitcoin and other cryptocurrencies has increased in Nigeria. This is because more and more people realize the potential benefits of using digital currencies like Bitcoin. The purpose of this blog post is to explore different ways to make money with Bitcoin in Nigeria in 2023.

Whether you’re new to Bitcoin or have been following it for a while, this post will help you understand the opportunities available and how to take advantage of them.

The truth is that Bitcoin and other cryptocurrencies can initially seem intimidating and confusing. But with some knowledge and the right approach, anyone can start making money from Bitcoin in Nigeria.

In this blog post, I will discuss the most popular and effective ways to make money with Bitcoin in Nigeria so you can decide which one is right for you. I will cover everything from buying and selling bitcoin to trading and mining.

Whether you want to make a quick buck or build a long-term investment portfolio, this post will provide the information and resources you need to get started. So let’s dive in and explore the exciting world of Bitcoin and how to make money with it in Nigeria in 2023.

1. Bitcoin Buying And Selling

Engaging in Bitcoin Buying and selling might seem daunting, but it’s pretty simple once you understand the basics. Bitcoin is a digital currency that can be bought and sold online.

First, you must create an account on a platform that allows users to buy bitcoin. Some popular options are Binance, Bitget and OKX. Once you’ve created an account, verify your identity and link a payment method. Your payment method can be a bank account credit or debit card. Once your account is set up and verified, you can buy bitcoin.

The bitcoin buying process is similar to buying anything else online. You must select the amount of bitcoin you want and then complete the purchase using your linked payment method.

It’s important to note that Bitcoin’s price can fluctuate widely. Hence, keeping an eye on the current price before purchasing is a good idea. Once you have bitcoin, you can keep or sell it. To sell your bitcoin, use a crypto platform that sells bitcoin at the highest rates.

2. Mining Bitcoin

Bitcoin mining involves using special computer hardware to verify and record transactions on the Bitcoin network. In return for their work, miners are rewarded with newly created bitcoins.

It is important to note that mining Bitcoin is different from buying or trading it. It is a way to earn bitcoin by contributing to the security and stability of the network.

When someone makes a transaction using Bitcoin, that transaction is broadcast to the entire network. Miners then collect these transactions and group them into blocks. These blocks are then added to the blockchain’s existing chain of blocks. This process is called “mining.

To mine bitcoin, you need special hardware called an ASIC miner. These machines are specially designed for bitcoin mining and are much more efficient than a regular computer. They can be expensive to buy, so some miners join a mining pool where they work with other miners to increase their chances of mining bitcoin.

The Bitcoin mining process is also very resource-intensive and requires a lot of electricity. Because of this, many miners are located in areas with cheap electricity, like China. However, with the advent of renewable energy, some miners are now located in regions with enormous solar or wind power. The miner is rewarded with newly created bitcoins when a block is mined. This reward is known as the block reward and is currently set at 6.25 bitcoins per block. The block reward is also halved every 210,000 blocks, roughly every four years. This means the number of bitcoins created daily will decrease over time. This is done to prevent the total number of circulating bitcoins from becoming too large.

Bitcoin mining can be profitable, but it’s only for some. It requires a significant investment in hardware and electricity, and the difficulty of mining increases over time as more miners join the network. Additionally, the price of bitcoin can be volatile, meaning the value of the bitcoins you mine can fluctuate wildly.

3. Bitcoin Trading

Bitcoin trading can be a great way to make money in Nigeria, but also risky. To trade bitcoin, you must first buy it and then hold it, hoping its value will increase. If you do, you can sell it for a profit. But if the value goes down, you could lose money.

When trading Bitcoin, the key is to have a strategy and stick to it. You should also pay attention to news and events that could affect the value of Bitcoin, such as Changes in government regulations or the announcement by large companies that they will accept Bitcoin as a payment method. A popular strategy for bitcoin trading is called “daily trading.” This involves buying and selling bitcoin on the same day, trying to make a small profit each time.

Day traders often use technical analysis to decide when to buy and sell. Technical analysis involves the study of charts and patterns to foretell future price movements. Another strategy is called “swing trading.” This involves holding bitcoin for periods ranging from a few days to a few weeks in order to make bigger profits. Swing traders frequently use technical analysis but may also pay attention to broader market trends and news.

It is important to note that trading Bitcoin or any other cryptocurrency in this context is highly speculative and risky. It is not recommended for people who do not know the financial markets well and have no trading experience.

It’s always a good idea to start small and only invest what you can afford to lose. Before you start trading Bitcoin, learning as much as possible about the different exchanges and platforms available is also a good idea. Each has its fees, features, and risks. It’s also important to ensure a secure way to store your bitcoin, such as a hardware wallet.

4. Receiving Bitcoin As A Form Of Payment


Receiving Bitcoin as a means of payment for goods and services may seem daunting at first, but it’s quite simple and can offer many benefits to your business. First, let’s explain what bitcoin is. Bitcoin is a digital currency, or cryptocurrency, that enables peer-to-peer transactions without a central authority. It is decentralized and works on a technology called “Blockchain.

Now let’s talk about how your business can start accepting Bitcoin as payment in Nigeria. The first step is to set up a reliable bitcoin wallet that will allow you to receive bitcoin and exchange it for cash quickly and easily. There are many wallets, including software wallets you can download onto your computer or mobile device and hardware wallets like USB drives.

Advertisement

Leave a Comment


Disclaimer: HikimaTV Editors are not recruiters or employers, we do not give expert advice on travels or related issues, please see a qualified travel agent for advise. We also do not offer direct scholarship or Jobs , At Hikimatv.com, we only currate and post important updates regarding the topics we share.

Hikimatv Blog | About Us | Contact Us | Discalimer | Privacy Policy