Cryptocurrency regulation can create wealth, taxation avenues – LIRS


The Executive Chairman of the Lagos State Internal Revenue Service, Ayodele Subair, has said cryptocurrency could create employment, wealth and avenues for taxation if properly regulated.

Subair stated this while reacting to the decision of the Central Bank of Nigeria to place restrictions on the use of cryptocurrencies by commercial banks in the country.

The CBN had in February directed deposit money banks to desist from transacting with entities dealing in cryptocurrencies.

The apex bank explained that its recent regulatory directive became necessary to protect the financial system and Nigerians from the risks involved in crypto assets transactions, which it said had escalated in recent times.

It said cryptocurrencies were increasingly being used for money laundering, terrorism financing and other criminal activities due to their speculative and untraceable nature.

 “Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.

“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators,” the bank said.

But the policy generated mixed reactions from experts and users of the digital currency, with many Nigerians faulting the bank’s action.

Subair, in an interview, said though the difficulty in tracing beneficial owners of cryptocurrency assets negated the call towards better global fiscal arrangement being canvassed by the tax authorities to address illicit financial flow, it would have been beneficial for relevant authorities understanding the system better and come up with measures to regulate it.

He said, “My opinion is divided, though I can identify with the position of the CBN. The economy was beginning to suffer from the dark side of cryptocurrencies. Citizens were taking out money from their bank accounts for money laundering and other sinister reasons, thus, putting the country in heavy security risk.”

“The inherent difficulty in tackling and tracing beneficial owners of cryptocurrency assets negates the call and strident steps towards better global fiscal arrangement being canvassed by the tax authorities to tackle illicit financial flow. On the other side of the argument, it could also have been efficient for the authorities to understand the system better and put in place measures to regulate it in a better manner, let it create wealth to enable better and proper taxation avenues, as well as help the unemployment statistics.”

Meanwhile, the LIRS chairman said the agency was working to close the deficit in taxation in the state created by tax invaders, especially in the informal sector.

He said the problem would be reduced through collaboration among all levels of government and the use of database systems, including the National Identification Number.

Subair added, “Almost all transactions that involve citizens and the government require the provision of a tax clearance to determine the level of tax compliance of such citizens. We are convinced that tax evasion shall also be drastically reduced once the synergy between the governments at all levels has been adequately established. For example, we are considering the possibilities of keying into established database systems, such as the ongoing National Identification Number registration system.”

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