Binance, a leading cryptocurrency trading platform, has withdrawn the Nigerian naira (NGN) from its peer-to-peer (P2P) trading service, sparking concern among its Nigerian user base. This move comes in the wake of allegations from Nigerian authorities accusing the platform of contributing to the naira’s devaluation.
Government Accusations and Economic Concerns
Presidential adviser Bayo Onanuga criticized Binance’s impact on the Nigerian economy, accusing the platform of manipulating foreign exchange rates. Amidst an economic backdrop of soaring inflation rates—hitting a near three-decade high of 29.9%—the Nigerian government has increased its focus on cryptocurrency services, which have been pivotal in setting an informal exchange rate for the naira.
Crypto Regulations and Restrictions
The P2P feature of Binance, allowing direct transactions between buyers and sellers without an intermediary, gained popularity in Nigeria following the government’s 2021 ban on crypto transactions within the banking sector. Recently, Binance users reported difficulties accessing various crypto exchange websites, leading to a temporary cap on the selling price of Tether (USDT) on Binance’s P2P platform.
Binance Under Scrutiny
The Central Bank of Nigeria (CBN) has raised alarms over “suspicious flows” of funds through Binance Nigeria, with reports indicating that $26 billion moved through the platform in 2023 from unidentified sources. Additionally, there have been reports of senior Binance officials being detained by Nigeria’s National Security Adviser’s office as part of a broader crackdown on cryptocurrency exchanges.
Community Reaction and Future Outlook
The cryptocurrency community in Nigeria has expressed frustration over the government’s hostile stance towards digital currencies, arguing that this approach overlooks the broader issues plaguing the nation’s economy. Critics suggest that instead of targeting cryptocurrencies, the government should concentrate on boosting manufacturing and exports to address the foreign exchange crisis effectively.
Binance’s decision to remove the naira from its P2P platform underscores the growing tension between cryptocurrency platforms and Nigerian authorities, highlighting the challenges facing the adoption and regulation of digital currencies in the country.
