Peer-to-peer (P2P) cryptocurrency traders and over-the-counter (OTC) dealers say Nigeria’s new virtual asset tax framework—which mandates a 1.5% stamp duty charge on digital assets—risks raising trading costs and potentially driving activity away from regulated exchanges and into less visible channels.
Joshua Adedeji, a Nigerian OTC bulk trader who said he processes about $500,000 worth of USDT—a dollar-backed stablecoin—weekly on cryptocurrency exchange Bybit, said the tax cost is far higher than his existing operating costs.
“Transfer charges were my biggest transaction costs before,” Adedeji said. “Now, stamp duty and other taxes [will account for] much higher costs, because the higher percentage of the tax is on transactions.”
The compliance burden will weigh heavily on crypto traders who rely on very small price differences to make money. Frequent stamp duty deductions increase the cost of moving money between wallets, exchanges, and customers, cutting into already thin margins for day traders and swing traders who buy and sell cryptocurrencies to speculate on price movements.
Adedeji said he typically earns about ₦0.5 ($0.00037) per USDT on spreads when trading cryptocurrencies. He processes transactions for over 100 customers weekly, according to him.
“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 tax rules are enforced strictly.
“Volume of P2P will reduce drastically, because the margins of profit are slim, before even factoring in losses,” Adedeji said.
Kenny Olawale, a Lagos-based crypto trader who trades P2P on the agent-based stablecoin startup, Accrue, said he expects to see a similar squeeze. He said his business processes between $2,000 and $10,000 weekly across 50–150 customers, and that stablecoin adoption among non-crypto-native users has been rising in recent months.
Before the new rules, his major business costs were bank transfer charges, including existing stamp duties for fiat bank transfers—₦50 ($0.037) for transactions above ₦10,000 ($7.34)—and blockchain network fees, according to him.
He said the 1.5% crypto stamp duty could become problematic for stablecoins used for cross-border payments and daily expenditure.
“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.”
He said P2P spreads have narrowed to as little as ₦2–₦5 per dollar, leaving 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,” Olawale 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.”
Taxing the breadth of Nigeria’s virtual asset economy
Nigeria’s new tax guidelines, signed on July 31 and announced by the Nigeria Revenue Service (NRS) on August 3, introduce a 1.5% stamp duty on virtual asset transfers, including cryptocurrencies and stablecoins.
They also require exchanges to deduct withholding tax when users dispose of crypto assets, while a 7.5% value-added tax (VAT) applies to taxable services and transaction fees charged by virtual asset service providers (VASPs).
The framework goes beyond retail trading. Virtual asset companies will also pay VAT fees on almost every transaction that counts as a source of revenue, such as brokerage commissions, withdrawal and transaction fees, and listing fees paid by token issuers seeking to have their assets listed on exchanges.
Crypto companies operating in Nigeria are also subject to 30% company income tax, as Nigeria seeks to drive up collections.
Traders say the combined effect is that taxes would apply at multiple stages of a transaction: when money enters the crypto system, when assets are transferred, and when they are sold.
P2P traders who buy and sell digital assets through centralised exchanges such as Bybit, Bitget, and Binance P2P—or through informal channels such as WhatsApp and Telegram—will not be spared.
Under the guidelines, centralised P2P platforms that hold buyers’ funds in escrow until a trade is completed would be responsible for deducting applicable taxes before releasing funds. Platforms that merely 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 are expected to declare and remit applicable taxes directly to the authorities, with penalties for non-compliance.
Questions over enforcement
Industry operators say the framework differs from most major jurisdictions, such as the United Kingdom, where tax is typically triggered by a realised gain—the profit made when an asset is sold for more than its purchase price. Kenya proposed a 10% excise duty on the transaction fees that VASPs charge.
Opeyemi Akinremi, co-founder of B2B crypto payments startup Ivorypay and consumer-facing exchange Duffle, said Nigeria’s framework taxes the entire transaction lifecycle.
“Tax becomes payable even when there’s no profit at all, eroding capital regardless of outcome,” Akinremi said.
He illustrated the effect with a hypothetical ₦1 million ($734) Bitcoin purchase. A 1.5% stamp duty would deduct ₦15,000 ($11) on entry. Selling the asset the next day at the same price could trigger about ₦9,850 ($7.23) in withholding tax, costing the trader ₦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 said the government’s approach is to enforce collectability by turning cryptocurrency exchanges and other VASPs into withholding agents, ensuring revenue is captured before funds leave the regulated system.
However, he warned that the framework could create a strong incentive for traders to migrate to P2P channels, OTC desks and offshore platforms that have 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.
Yet, when it comes to offshore crypto trading, Nigeria’s tax authority is making that responsibility lie solely on the user. When retail users buy and sell virtual assets on foreign exchanges, they must declare all applicable taxes, according to the guidelines.
Despite the broad collection obligations, the mechanism for deducting and remitting the taxes remains unclear, Akinremi said.
“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 compliance burden is compounded by the complexity of cryptocurrency markets, where multiple blockchains, token types, and external wallets interact in ways traditional financial systems do not.
“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.”
Fear of driving activity underground
Rume Ophi, programmes and communications lead at the Virtual Asset Service Provider Association (VASPA), an industry advocacy group, believes crypto taxation is inevitable and welcomed the government’s recognition of crypto as part of Nigeria’s financial system.
However, he noted that imposing heavy transaction taxes too early in the formalisation process could undermine compliance efforts.
“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 imposing broad transaction levies.
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,” Oyebanji said. “However, taxing every stage of a virtual asset transaction [in Nigeria’s case] violates the tax canon of fairness.”
Nigeria, he added, 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. However, 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 such as Adedeji and Olawale, the tension dances around whether running a P2P business can remain a profitable venture once every virtual asset transfer, conversion, and sale is taxed.
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