Traders Warn of Higher Costs

Nigeria's new tax framework for virtual assets is drawing concern from cryptocurrency traders and industry operators, who say the introduction of a 1.5% stamp duty on digital asset transfers could make already low-margin P2P trading significantly more expensive.

Traders who operate through peer-to-peer platforms and over-the-counter (OTC) channels argue that the additional cost could reduce trading volumes and potentially push some activity away from regulated exchanges toward informal or offshore markets.

The concerns come after the Nigeria Revenue Service (NRS) introduced new tax guidelines covering cryptocurrency and other virtual assets.

Why P2P Traders Are Particularly Concerned

P2P cryptocurrency businesses often operate on high transaction volumes but relatively small margins.

Traders make money from the difference between the prices at which they buy and sell assets such as USDT, meaning even small additional costs can affect profitability.

Joshua Adedeji, an OTC trader who says he processes around $500,000 worth of USDT each week through Bybit, said taxes could become a significantly larger expense than some of his existing transaction costs.

He estimates that his typical spread is around ₦0.50 per USDT, while serving more than 100 customers each week.

For businesses operating at that scale, traders say applying charges across multiple stages of a transaction could quickly reduce their margins.

Stablecoin Transactions Could Also Feel the Pressure

The potential impact extends beyond speculative cryptocurrency trading.

Stablecoins such as USDT are increasingly used for payments, transfers and cross-border settlements.

Kenny Olawale, a Lagos-based P2P trader, said his business processes between $2,000 and $10,000 each week across dozens of customers.

He argues that applying a 1.5% charge to different parts of a transaction could make stablecoins less attractive for everyday financial activity.

For users moving digital dollars to fund cards, pay for goods or settle transactions, the additional tax could become an extra cost on money that may not necessarily generate an investment return.

What Nigeria’s New Framework Covers

The tax guidelines were signed on July 31 and announced by the Nigeria Revenue Service on August 3.

They introduce several tax obligations for the country's virtual asset sector.

These include:

  • A 1.5% stamp duty on virtual asset transfers.
  • Withholding tax obligations when users dispose of crypto assets.
  • 7.5% VAT on taxable services and transaction fees charged by virtual asset service providers.
  • Corporate income tax obligations for crypto businesses.

The framework also covers revenue earned by virtual asset service providers through activities such as brokerage commissions, withdrawal charges, transaction fees and listing fees.

Taxes Could Apply at Multiple Stages

One of the biggest concerns raised by industry participants is that a single crypto transaction could encounter tax obligations at different points.

Money entering the digital asset ecosystem, transfers between parties and the eventual disposal of an asset could all potentially trigger different tax responsibilities.

For P2P platforms that hold customer funds in escrow, the platforms may be responsible for deducting applicable taxes before releasing funds.

Platforms that simply connect buyers and sellers without holding customer funds would instead have record-keeping and reporting responsibilities.

Individual traders and OTC dealers are also expected to meet their own tax obligations where applicable.

An Example of the Potential Cost

Industry executives say the structure could create tax costs even when a trader does not make a profit.

Opeyemi Akinremi, co-founder of Ivorypay and Duffle, used a hypothetical ₦1 million Bitcoin transaction to illustrate the issue.

Under the framework, a 1.5% charge at the purchase stage would amount to ₦15,000.

If the asset were sold the following day for roughly the same value, additional tax could apply when it is disposed of.

The result could be thousands of naira in tax payments despite the trader making little or no economic gain.

Industry participants argue that this differs from systems where taxation is primarily linked to realised investment gains.

Could Trading Move Underground?

The possibility of traders moving away from regulated platforms is one of the biggest concerns surrounding the policy.

If the combined cost of taxes and fees becomes too high on regulated exchanges, traders may look for alternatives, including informal P2P networks, OTC dealers and offshore platforms.

Nigeria already has a large informal crypto economy operating through channels such as WhatsApp, Telegram and direct OTC relationships.

Moving more activity into these channels could make transactions harder for regulators to monitor and potentially undermine the government's efforts to formalise the sector.

Offshore Exchanges Shift the Compliance Burden

The new framework does not simply eliminate tax obligations when Nigerians use foreign cryptocurrency exchanges.

Retail users trading virtual assets through offshore platforms are still expected to declare applicable taxes themselves.

However, industry representatives say uncertainty remains around how some of the new obligations will be practically collected and reported.

There are also concerns about the absence of sufficiently developed technical infrastructure for automated tax reporting and remittance.

Compliance Infrastructure Remains a Challenge

Beyond the tax rates themselves, cryptocurrency companies face the technical challenge of implementing the new rules.

The industry operates across multiple blockchains, wallets, tokens and exchanges, creating a much more complicated transaction environment than traditional financial systems.

Businesses may therefore need to build their own systems for tracking transactions, calculating tax liabilities and complying with reporting requirements.

Industry representatives argue that clearer technical guidance and automated government systems could make compliance more practical.

Industry Calls for a More Balanced Approach

Some industry representatives agree that cryptocurrency should be brought into the formal tax system but believe the current structure could discourage legitimate participation.

Rume Ophi of the Virtual Asset Service Provider Association (VASPA) supports the recognition of crypto as part of Nigeria's financial system but has called for caution when introducing broad transaction taxes.

Some industry participants have suggested temporary reliefs, thresholds or incentives for smaller businesses and startups while the sector develops.

The argument is that excessive taxation at an early stage could encourage businesses and traders to avoid formal channels rather than comply.

Nigeria Could Risk Losing Visibility Over Crypto Activity

Legal and industry experts have also warned that Nigeria's large informal P2P market could become even less visible if regulated trading becomes significantly more expensive.

The country effectively has two crypto markets: a formal sector involving regulated or centralised platforms and a much larger informal network of traders and OTC operators.

If more transactions move into private channels, regulators could find it harder to monitor activity and collect revenue.

That could undermine one of the government's main objectives: bringing cryptocurrency activity into the formal economy.

The Bigger Question for Nigeria’s Crypto Market

Nigeria's challenge is no longer whether cryptocurrency should be taxed. The country has clearly moved toward incorporating virtual assets into its tax framework.

The bigger question is whether the tax structure can generate government revenue without making formal participation unnecessarily expensive.

Better record-keeping, taxpayer identification and reporting requirements could strengthen the sector's transparency.

However, traders and industry operators argue that imposing transaction-based taxes alongside other tax obligations could weaken liquidity, reduce P2P activity and slow stablecoin adoption.

For Nigeria's growing digital asset economy, the coming months will show whether the new framework encourages greater formalisation—or pushes more traders toward less visible markets.