Nigeria Enforces Crypto Exchange Ban Amid Naira Decline

Nigeria Enforces Crypto Exchange Ban Amid Naira Decline

Nigeria has initiated a blockade on several leading cryptocurrency exchanges, including Binance, Coinbase, and Kraken, in an effort spearheaded by the Nigerian Communications Commission (NCC). This drastic measure aims to curb currency speculation and stabilize the rapidly depreciating naira, which has hit record lows against the dollar. The telecoms regulator’s directive to restrict access to these platforms marks a significant policy reversal for President Bola Tinubu’s administration, which previously viewed digital assets as a component of its market-friendly reforms intended to bolster foreign investment and revitalize the nation’s economy.

The government’s move to limit access to cryptocurrency exchanges contrasts sharply with earlier efforts to integrate digital assets into Nigeria’s financial landscape. These efforts included regulatory attempts to manage digital currencies and a reversal of a prior ban on crypto transactions, aimed at enhancing money laundering and terrorism financing standards.

Amid attempts to consolidate its exchange rate system and move away from a longstanding currency peg, Nigeria has witnessed the naira’s value plummet, undergoing two devaluations in just eight months. The naira’s exchange rate against the dollar reached a staggering 1,600 on Wednesday, a steep decline from less than 900 at the beginning of January. Cryptocurrency exchanges have played a pivotal role in establishing unofficial market rates for the naira, with Binance’s prices often serving as a benchmark for local foreign currency exchange rates.

The government’s crackdown has sparked controversy, with Bayo Onanuga, a special adviser to President Tinubu, accusing Binance of usurping the Central Bank of Nigeria’s role in setting currency rates. Binance responded by assuring users in Nigeria that their funds remain secure despite access issues to its platform. Meanwhile, the NCC, Coinbase, and Kraken have yet to comment on the matter.

Nigeria ranks high globally in private wealth held in cryptocurrency, reflecting the digital asset class’s appeal, particularly among the youth, as a hedge against the naira’s instability. However, the country has employed unconventional methods in past years to defend its currency, including shutting down price-setting websites and physically altering urban landscapes to hinder parallel market activities. Moreover, Binance faced legal challenges within Nigeria last year, deemed illegal by the Nigeria Securities and Exchange Commission due to regulatory non-compliance.

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