Crypto exchange Binance has stopped supporting Nigeria’s fiat currency, the Naira, on its peer-to-peer platform. Additionally, two Binance executives were detained in Nigeria, where they traveled to address the ban on crypto exchange sites.
Nigeria, known for its high crypto adoption, has the world’s highest peer-to-peer volume. This move follows growing regulatory concerns about Binance’s involvement in Nigeria’s forex challenges.
Nigerian Government Targets Crypto Firms Amid Forex Concerns
Last week, the Nigerian government took action to restrict access to the online platforms of several crypto firms, including Binance. The move was aimed at curbing what authorities perceived as ongoing manipulation of the foreign exchange market and illegal fund movements.
However, in the crypto industry, it’s widely understood that exchange rates on peer-to-peer (P2P) markets are not controlled by crypto exchanges themselves. Instead, they are determined by the agreement between individuals trading their assets. Known as the “open-market exchange rate,” these rates are influenced by participants in P2P markets, especially those involving unstable fiat currencies. As a result, exchange rates can fluctuate significantly based on market conditions and often surpass the interbank rate.
Interestingly, this marks the first instance where a government has attributed the open market rates of its currency to crypto exchanges.
It’s essential to highlight that the Nigerian Securities and Exchange Commission (SEC) had declared Binance’s operations illegal back in 2023, citing the exchange’s lack of registration in the country.
Allegations Against Binance Nigeria by Central Bank Governor
Olayemi Cardoso, the governor of Nigeria’s Central Bank, recently made startling allegations against Binance Nigeria. According to local media reports, Cardoso claimed that Binance Nigeria facilitated the transfer of $26 billion from unidentified sources over the past year.
Cardoso emphasized the ongoing efforts to crack down on crypto platforms and highlighted the collaboration between federal agencies to address foreign exchange rate distortions. He underscored the authorities’ determination to assert control over the market and prevent external manipulation that could adversely impact Nigerians.
Cardoso reaffirmed the government’s commitment to taking decisive measures to ensure market stability and prevent any activities that could undermine the economy’s integrity.
Nigeria’s Youth Embrace Cryptocurrencies Amid Government Restrictions
Despite the Nigerian government’s recent stance on cryptocurrencies, the country’s young and tech-savvy population continues to show significant interest in digital assets.
Victor Asemota, a prominent tech entrepreneur in Nigeria, highlighted the nation’s reliance on cryptocurrencies, particularly for cross-border transactions. He noted a lack of alternative reliable channels, which has led many Nigerians to turn to cryptocurrencies as a viable option.
Asemota emphasized the resilience of cryptocurrencies, stating that attempts to suppress them would only drive them underground. He argued that the government’s focus should instead be on improving alternative channels and providing easier choices for transactions.
Exactly!! People can’t separate speculation from genuine economic activity on a channel that happens because of friction elsewhere. The first day I realized that crypto was more of a trader or importer thing in Nigeria was when I knew it was going to become very big.
It is big… https://t.co/47Hs96cTW7
— Osaretin Victor Asemota (@asemota) February 28, 2024
According to him, when people have more accessible options, they are likely to embrace them, making it essential for the government to prioritize efficiency in financial services.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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