The recent clampdown on Binance’s operations in Nigeria has thrown a wrench into the gears of the local cryptocurrency industry. Stakeholders express their dissatisfaction and frustration as they face dire consequences for livelihoods and a potential spike in youth unemployment.
As we all know, the Central Bank of Nigeria (CBN) has intensified its scrutiny over the crypto industry, but specifically Binance for alleged illicit financial flows, leading to an outright ban of all naira transactions on what is the world’s largest cryptocurrency exchange. The fallout is palpable among Nigerian traders, who have resorted to less conventional means like WhatsApp and Telegram groups for trading, as recounted by Nathaniel Luz, CEO of Flincap.
No doubt this has had a chilling effect on market confidence, as is seen across the community, where the abrupt delisting of naira services by Binance has prompted fears of a liquidity crisis and a scramble for alternatives. After it banned Naira, Binance converted all balances to Tether (USDT), effectively freezing withdrawals.
Further complicating matters, the Securities and Exchange Commission of Nigeria has declared that Binance’s operations within the country are unauthorized, given its lack of registration with the agency. This regulatory pushback against Binance contrasts sharply with its somewhat broader acknowledgment of crypto’s role in the economy, as evidenced by the CBN’s recent shift to a more crypto-friendly stance after initially advising banks to shun cryptocurrency transactions.
The ban has sparked a broader debate on the efficacy of such measures, with critics like economist Shedrach Israel likening it to a misguided attempt at controlling the exchange rate. Israel’s critique extends to the entire financial strategy of CBN, urging a reevaluation of Forex policies and a closer examination of the financial practices of the country’s elite.
So if you ask me, how are Nigerians doing in the aftermath of Binance’s departure, I’d say mostly terribly.
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