Binance, a leading cryptocurrency exchange platform boasting over 170 million users worldwide, has made a significant move by disabling its peer-to-peer (P2P) feature for Nigerian users.
This functionality, known as the P2P market, facilitates direct trading of cryptocurrencies between buyers and sellers without the involvement of any intermediaries.
The decision comes against the backdrop of the Nigerian Government’s crackdown on the country’s cryptocurrency industry, which was outlawed in 2021.
Since then, the P2P market emerged as a popular alternative for Nigerians to engage in crypto trading and establish informal exchange rates for the national currency, the naira.
Concerns have been raised by Nigerian authorities regarding the influx of approximately $26 billion through Binance Nigeria from undisclosed sources in the previous year.
In response, the Central Bank of Nigeria (CBN) advocated for collaborative efforts among various agencies, including the Office of the National Security Adviser (NSA), the Securities and Exchange Commission (SEC), the Police, and the Economic and Financial Crimes Commission (EFCC), to combat illicit financial activities.
To address what it perceives as ongoing manipulation of the foreign exchange market and illicit money transfers, the Federal Government recently took steps to disable the websites of Binance and other cryptocurrency companies. Furthermore, two senior Binance officials have been detained in Nigeria as part of the government’s crackdown on crypto exchanges to curb speculation on the naira.
Nigeria, known for its youthful population and rapid population growth, has emerged as a key market for cryptocurrency activities. Despite regulatory challenges, Nigeria continues to exhibit robust cryptocurrency usage, with a 9% annual growth rate, according to a report from Chainalysis.
However, state officials have raised concerns about the role of cryptocurrency companies in facilitating money laundering and currency speculation, attributing them to the naira’s decline.
In a significant development, the Nigerian Communications Commission (NCC) recently directed telecom companies to restrict access to major bitcoin exchanges, including Binance, Coinbase, and Kraken.
Commenting on the situation, President Bola Tinubu’s Spokesperson, Bayo Onanuga, accused Binance of “blatantly” influencing exchange rates and encroaching upon the CBN’s role in setting currency rates. Amidst these regulatory challenges, the future of cryptocurrency operations in Nigeria remains uncertain, with stakeholders closely monitoring developments.
