Nigeria has introduced a 1.5% stamp duty on virtual asset transfers as part of a broader tax framework, a move that peer-to-peer (P2P) traders and over-the-counter (OTC) dealers warn could push digital currency activity into the shadows. The new rules, which also include withholding tax and value added tax, are meant to raise revenue, but industry players say they may instead drive business away from regulated exchanges.
Joshua Adedeji, a Nigerian OTC bulk trader who clears around $500,000 worth of USDT each week on Bybit, said the tax burden now dwarfs his previous operating costs. “Transfer charges were my biggest transaction costs before,” he said. “Now, stamp duty and other taxes [will account for] much higher costs, because the higher percentage of the tax is on transactions.”
Adedeji, who serves more than 100 customers weekly, typically earns about ₦0.5 ($0.00037) per USDT from spreads. In a business driven by volume, even a modest levy can eliminate profitability. “The heart of P2P is the volume of transactions, which doesn’t necessarily translate into profit,” he said. “Taxing multiple points of transactions will definitely have a bad ripple effect on P2P.” He expects trading volumes to fall sharply if the rules are strictly enforced. “Volume of P2P will reduce drastically, because the margins of profit are slim, before even factoring in losses,” Adedeji added.
Kenny Olawale, a trader based in Lagos who deals in stablecoins on the agent based platform Accrue, processes between $2,000 and $10,000 weekly across 50 to 150 customers. He said stablecoin adoption among people who are not already crypto natives has been rising in recent months. Before the new rules, his major costs were bank transfer charges, including the existing ₦50 ($0.037) stamp duty for fiat transfers above ₦10,000 ($7.34), and blockchain network fees. The 1.5% crypto stamp duty, he argued, could be especially harmful for stablecoins used in cross border payments and daily spending.
“The turnaround for exchanges when one user is funding a virtual card and another is paying at a restaurant doesn’t even count as investment with a big return,” Olawale said. “Charging 1.5% on each leg makes it all ridiculous.” With P2P spreads compressed to as little as ₦2 to ₦5 per dollar, there is little room to absorb additional taxes. “I think [the tax rules] will be bad for the ecosystem and adoption of stablecoins for easy payment settlement,” he said. “Users generally don’t like to pay for spending their own money again. When the dust settles, we might need to stop trading or reduce it significantly to limit losses.”
The tax guidelines were signed on July 31 and announced by the Nigeria Revenue Service (NRS) on August 3. In addition to the 1.5% stamp duty on virtual asset transfers, exchanges must deduct withholding tax when users dispose of crypto assets, and a 7.5% value added tax (VAT) applies to taxable services and transaction fees charged by virtual asset service providers (VASPs). Virtual asset companies will also pay VAT on nearly every revenue source, including brokerage commissions, withdrawal and transaction fees, and listing fees paid by token issuers. They remain subject to the 30% company income tax as Nigeria seeks to boost revenue collection.
Traders note that taxes will apply at multiple stages of a transaction: when money enters the crypto system, when assets are transferred, and when they are sold. This affects P2P traders operating on centralised exchanges such as Bybit, Bitget and Binance P2P, as well as those using informal channels like WhatsApp and Telegram.
Under the guidelines, centralised P2P platforms that hold buyers’ funds in escrow until a trade is completed must deduct applicable taxes before releasing funds. Platforms that only provide a marketplace without taking custody of customer funds must keep records and report transactions to the NRS. Individual P2P traders and OTC dealers handling large volumes of crypto liquidity must declare and remit taxes directly, with penalties for non compliance.
The framework differs from most major jurisdictions. In the United Kingdom, for example, tax is triggered by a realised gain, meaning the profit made when an asset is sold for more than its purchase price. Kenya has proposed a 10% excise duty on the transaction fees that VASPs charge, not a levy on every trade.
Opeyemi Akinremi, cofounder of B2B crypto payments startup Ivorypay and consumer exchange Duffle, said Nigeria is taxing the entire transaction lifecycle. “Tax becomes payable even when there’s no profit at all, eroding capital regardless of outcome,” he said. He illustrated with a hypothetical ₦1 million ($734) Bitcoin purchase: a 1.5% stamp duty would take ₦15,000 ($11) on entry, and selling the next day at the same price could trigger about ₦9,850 ($7.23) in withholding tax. The trader would be out ₦24,850 ($18.25) in taxes, excluding exchange fees, despite recording no gain.
“A trader who loses money on a bad call would still pay entry and exit tax on top of that loss, because the tax is triggered by the transaction itself, not by whether any economic gain occurred,” Akinremi said. He acknowledged the government is trying to enforce collectability by turning exchanges and other VASPs into withholding agents. But he warned that the framework could push traders to P2P channels, OTC desks and offshore platforms with no obligation to deduct or remit Nigerian taxes. “Once going through a regulated Nigerian exchange starts costing you 2.5%–3% per trade, a rational trader starts asking why they would do this on a platform that taxes them when they can do the same trade elsewhere and keep that money,” he said.
For retail users trading on foreign exchanges, the guidelines require them to declare all applicable taxes themselves. Akinremi said the mechanism for deducting and remitting the taxes remains unclear. “The obligation is clear, but the mechanism isn’t,” he said. “Withholding tax, stamp duty, and VAT are defined, but there’s no mature government portal or API [application programming interface] to remit through, so VASPs have to build that infrastructure themselves.” The complexity of crypto markets, with multiple blockchains, token types and external wallets, adds to the compliance burden.
“The question is not whether crypto should be taxed—it should,” Akinremi said. “The question is whether the tax structure encourages users and businesses to operate transparently within Nigeria or unintentionally encourages migration to less visible markets.”
Rume Ophi, programmes and communications lead at the Virtual Asset Service Provider Association (VASPA), an industry advocacy group, said crypto taxation is inevitable and welcomed the government’s recognition of crypto as part of Nigeria’s financial system. However, he cautioned that imposing heavy transaction taxes too early in the formalisation process could undermine compliance. “When you start a tax regime for an industry that has gone through all sorts of harassment, you create another opportunity for people to bypass compliance,” Ophi said. He called for a review of the framework and suggested temporary tax reliefs or thresholds for startups and smaller market participants to encourage growth before broad levies are imposed.
Olayimika Oyebanji, legal consultant to the House of Representatives Ad-Hoc Committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and PoS Operations, described the framework as “a global anomaly.” “Tax obligations are often triggered at the point of realisation due to the convertible nature of virtual assets,” he said. “However, taxing every stage of a virtual asset transaction [in Nigeria’s case] violates the tax canon of fairness.”
He added that Nigeria already operates a dual crypto market: a formal exchange driven sector and a much larger informal P2P network that conducts significant trading through WhatsApp groups, Telegram channels, OTC desks and other unregulated channels. “This framework will not reduce overall trading activity,” Oyebanji said. “There is a strong likelihood that trading activities will remain in the shadows, far beyond the reach and visibility of the taxman.”
Stronger record keeping, reporting obligations and tax collection processes could help legitimise the sector, but operators say layering transaction taxes on top of profit taxes risks weakening liquidity on domestic exchanges and stalling stablecoin adoption. “Formalising VASPs—[introducing] Tax IDs, record-keeping, and reporting obligations—is reasonable and overdue,” Akinremi said. “Where the policy overreaches is layering an entry-and-exit transaction tax on top of the gains tax. A framework built for government revenue certainty ends up undermining its own revenue base by taxing the act of trading itself.”
For traders like Adedeji and Olawale, the central question is whether a P2P business can remain profitable once every virtual asset transfer, conversion and sale is taxed. The answer could shape not only their futures, but also whether Nigeria’s tax regime brings crypto into the open or pushes it further into the shadows.
