Nigeria: Digital Assets
It is no news that Nigeria until recently has not been very favourable toward cryptocurrency with the ban on financial instiinstitutions facilitating crypto transactions. However, the world of digital assets is rapidly developing and Nigeria also seems to be evolving as the Securities and Exchange Commission (SEC) is currently working on regulating cryptocurrency and has just issued crypto licenses for two Exchanges In Nigeria. The Federal Inland Revenue Services (FIRS) has also announced its plans to introduce new tax laws to regulate the cryptocurrency industry.
A report by Chainalysis revealed that Nigeria’s crypto transactions experienced a 9% year-over-year growth, reaching $56.7 billion between July 2022 and June 2023.
All of these show that digital assets are a signisignificant asset class and individuals or families looking to grow their wealth may have to consider this alternative investment option.
The Crypto Wealth Report 2024 from Henley & Partners provides essential insights that are particularly valuable on the trends and implications surrounding digital assets.
The report reveals a remarkable increase in global crypto wealth. Presently in 2024, there are approximately 100,000 crypto millionaires, 10,000 centi-millionaires, and 100 billionaires in the cryptocurrency space. This growth reveals that more people are accepting and trading in digital currencies. People are also open to the idea of accumulating wealth through digital assets and digital assets are becoming an increasingly important part of wealth management.
Several countries are at the forefront of crypto adoption, including United States, United Kingdom, Germany, and Singapore. These nations offer favourable regulatory environments and they have a robust infrastructure that encourages investments in digital assets. Thus, Individuals and families have to consider these jurisdictions for potential investment opportunities and residency options, as favourable legislation have an impact on the success of crypto investments especially for citizens of countries where there are zero to non-existing legislation on cryptocurrencies.
However, it must be noted that despite the growth of wealth from investments in digital assets, diversification of assets is still the best. Hence it is apt to balance your portfolios by incorporating both traditional assets (like stocks and bonds) and emerging digital assets. This balanced approach helps mitigate risks associated with the volatility of cryptocurrencies while still allowing you to capitalize on their growth potential.
Tax Implications of Digital Assets
One of the most significant challenges for crypto investors is understanding the tax implications associated with digital assets and how digital assets are taxed in different countries and jurisdictions. Peter Ferrigno in the report wrote about this.
While we await the FIRS regulation in Nigeria, its noteworthy to mention the way cryptocurrency is taxed across jurisdictions. Accordingly, the primary ways digital assets are taxed includes:
1. Profits from mining cryptocurrencies are taxed as self-employment or corporate income. Costs associated with mining can be deducted from taxable income, but taxes are incurred upon selling the mined assets.
2. Gains from buying and selling cryptocurrencies are categorized based on trading frequency. High-frequency traders are taxed on trading income, while occasional investors may be subject to capital gains tax.
3. Using cryptocurrency for purchases is treated as a barter transaction. Taxes are based on the market value of the crypto at the time of the transaction and if the value appreciates, capital gains tax will be payable.
Residency and Citizenship Planning for Crypto Investors
As the crypto market continues to grow, governments worldwide are actively competing to attract crypto wealth by offering favourable tax regimes and residency programmes. Drawing from Henley and Partners Crypto Wealth Report we explore some of the most attractive options for crypto investors looking to protect their wealth and optimize their tax situation.
The United Arab Emirates (UAE) stands out as a top destination for crypto investors. The country imposes 0% capital gains tax and personal income tax on crypto holdings and profits from selling, staking, trading, and mining crypto. Obtaining residence in the UAE is relatively straightforward through the golden visa program, which requires an investment of approximately USD 550,000.
Panama is another highly attractive option for crypto investors. The country levies 0% tax on crypto capital gains and profits from crypto trading.
Mauritius offers a 0% tax on crypto capital gains and a low 1% tax plus up to 2% for the “corporate social responsibility fund” for those who set up a small business locally to derive their livelihood from crypto trading.
Residence can be obtained through the Mauritius Residence by Investment Program, which requires an investment of USD 375,000 in one of six luxury residential real estate projects on the island.
Malaysia does not view crypto as a “capital asset” nor does it classify crypto as legal tender, resulting in tax-free crypto profits for individuals. However, traders who earn their income through repetitive trading will pay tax on their profits of between 3% and 30%.
Residence is available through the Premium Visa Program, which requires proof of offshore income equivalent to USD 8,500 per month or USD 100,000 per year, along with a USD 212,000 fixed-deposit in a local bank.
Portugal is considered one of the best spots for crypto investors who want to be in Europe. Crypto profits held for at least a year are subject to a 0% capital gains tax, while short-term holdings are taxed at 28%.
At the corporate level, crypto profits are taxed at between 28% and 35%, but structuring the income through an offshore limited liablity company can reduce the rate to 0%. The Golden Residence Permit requires a minimum investment of USD 275,000 in preserving Portuguese cultural heritage or supporting local artistic production
As crypto is being adopted globally, governments are actively competing for crypto-wealthy migrants. By taking advantage of the low tax rates offered by certain countries, crypto traders and investors can achieve significant tax savings while protecting their wealth.
At Fiduciary Services Limited, we help clients with the complexities of wealth management in the digital age. We advise on the protection, value optimization and estate planning structure for your digital assets. We keep an inventory of your Digital Assets, and their values and track all changes over time to the assets as part of your estate plan.
You can schedule a consultation to talk about your existing digital assets or investment by sending an email to
