FROM CIVIL PENALTIES TO PRISON: TAXATION OF DIGITAL ASSETS AND CRIMINAL ENFORCEMENT OF CRYPTOCURRENCY NON-COMPLIANCE IN NIGERIA

Abstract

Nigeria’s rapid adoption of cryptocurrencies and digital assets has revealed a significant regulatory gap between revenue law and criminal law. This article provides an analytical examination of how Nigeria employs criminal law mechanisms to enforce compliance with cryptocurrency tax obligations. The paper reviews the statutory framework governing liability to Capital Gains Tax (CGT) and the extent to which taxation of cryptocurrency transactions can be enforced within the Nigerian legal system. The study finds that Nigeria has adopted a fast-track criminalisation approach in addressing cryptocurrency transactions that are perceived to involve tax evasion, fraud, sabotage, or money laundering activities. While this approach may create a strong deterrent effect, it also generates legal uncertainty, overlapping institutional mandates, and potential infringement of taxpayers’ rights. The article concludes that the Nigerian regulatory approach prioritises punitive enforcement over legal clarity, creating difficulties in balancing revenue generation with predictability in the evolving digital economy. It recommends that the Nigerian government clearly define the mens rea required for crypto-tax violations, establish a statutory distinction between tax assessment procedures and criminal prosecution, and develop specialised blockchain audit capabilities within the Federal Inland Revenue Service (FIRS) before referring relevant matters to the Economic and Financial Crimes Commission (EFCC).