A CONCEPTUAL ANALYSIS OF TAXATION OF DIGITAL ASSETS VERSUS THE CRYPTO BAN IN NIGERIA: BALANCING FISCAL OBJECTIVES AND FINANCIAL INNOVATION

Abstract

The emergence of digital assets has transformed the world in terms of finance and has brought both opportunities and challenging regulation and fiscal problems especially to developing economies like Nigeria. The taxation, economic stability, and regulation of cryptocurrencies are crucial issues because of their decentralization and the lack of borders. Within the Nigerian context, these issues are further complicated by apparent inconsistency in the policies of the government developing interest in taxing online material and the banning of cryptocurrency-related businesses by the Central Bank in terms of their implementation in the formal banking structure. The paper critically discussed the tension between taxation and prohibition and what the opposing conception of these two potential implications imply with regard to fiscal sustainability and financial innovation. By using the conceptual and qualitative method, the research is based on comprehensive literature review, policy documents, and other theoretical frameworks to give a structured and interpretive analysis. It is implied in the discussion that the taxation-oriented strategies are typically linked with better visibility of regulations, greater growth potential of revenue generation, and financing financial innovation. On the other hand, the policies based on prohibition can restrain the activities within the formal financial system and, probably, transfer the digital asset operations to the unofficial or less transparent ways. These opinions are informed based on the past research and policy interpretations and not through empirical research. The paper thus suggests that by having a balanced regulation structure that incorporates taxation and sensible monitoring, a more consistent and sustainable policy framework can be provided to Nigeria. It however notes that these propositions are still exploratory and that further empirical studies are necessary to prove the arguments and guide evidence based policymaking. Simply, the paper indicates that cryptocurrency regulation and taxing, instead of its ban, would be economically beneficial, but additional evidence is needed to defend this standpoint