Why Binance’s ‘Exit’ From Nigeria Will Not Help Naira Or Stop Us From Trading – Binance Users Tell Neusroom
On March 5, 2024, millions of Nigerians received an email with the title “Binance To Discontinue All Nigerian Naira Service,” marking the ‘exit’ of the world’s largest cryptocurrency exchange from Nigeria.
In that mail, Binance said it would no longer support the deposit of naira and would convert all naira denomination balances in user wallets into stablecoin USDT after March 8, 2024. This follows the recent move by the Nigerian government against Binance, whose activities in the country have been linked to the continuous depreciation of the country’s currency, which has already lost over 200 percent of its value since the new administration of President Bola Tinubu took charge less than a year ago.
From a record 27-year inflation rate at 29.9 percent, a constantly deteriorating naira, and insecurity crisscrossing the country, including the northern part, which produces most of the country’s food, Nigeria, Africa’s largest economy with a population of over 200 million, is facing one of its worst economic crises in decades.
Tinubu’s economic reform, which he started shortly after assuming office in May last year, including subsidy removal and an attempt to float the exchange rate, has been signalled as the reason why the economy is experiencing challenges. To mitigate the fallout, the Central Bank of Nigeria (CBN) increased the interest rate by 400 basis points, but it is the attempt to stabilise the currency that has pitched the government against Binance.
On February 28, 2024, the Nigerian government detained two Binance executives who flew to Nigeria following the country’s earlier decision to ban several cryptocurrency trading websites. This is after several calls by government officials that the cryptocurrency exchange was responsible for the depreciation of the naira.
“We are concerned that certain practices go on that indicate illicit flows going through a number of these entities [crypto platforms] and suspicious flows at best,” Yemi Cardoso, CBN Governor said during the apex bank’s first Monetary Policy Committee (MPC) this year. Signalling Binance out, the apex bank chief claimed that “in the last one year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify.”
Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy, claimed that Binance was fixing the exchange rate on their platform.
“If we don’t clamp down on Binance, Binance will destroy the economy of this country. They just fix the rate,” Onanuga said when he appeared on Channels Television’s Politics Today program on February 28, 2024.
He added, “We have saboteurs. Look at what Binance is doing to our economy. That is why the government moved against Binance. Some people sit down using cyberspace to dictate even our exchange rate, hijacking the role of the CBN.”
While it is not certain if the clampdown on Binance will help the naira appreciate – as naira to dollar still hovers around $1 to ₦1561 as of March 6 – the Binance-Nigeria feud might just be a temporary setback to the 13 million Nigerians who trade cryptocurrency, many as a source of livelihood.
It’s not the first time the country has tried to regulate the cryptocurrency industry in Nigeria. In February 2021, the apex bank banned banks from allowing crypto traders to buy cryptocurrency directly from their bank accounts.
However, the ban failed to prevent Nigerians from investing in crypto, which, despite its volatility, has become a means of making an extra income for youths, in a country where it is estimated that of 88.4 million live in extreme poverty. That year, 2021, the use of Binance’s feature Peer-To-Peer (P2P) grew exponentially and became the primary means Nigerians deposit naira into their wallets before converting it to stablecoin and then trade with it as they would in the stock market.
A crypto trader, who pleaded for anonymity for fear of the government going after traders, said that “there are lots of other centralised exchanges operating in Nigeria which Nigerians can use.”
“Binance is popular because it is easier to use. But there are other platforms doing P2P. Even with the ban, Nigerians can still trade on Binance,” the trader based in Owerri, capital of Imo State, who has been trading for over five years told Neusroom.
Narrating his own crypto journey where he had once made over $50,000 but almost lost everything in the crypto crash of 2021, he said;
“I can trade my cryptocurrencies on Binance. The only feature I can’t do is use the P2P feature which allows me to deposit naira to the exchange by getting matched with someone else.”
With Bitcoin, the most valued cryptocurrency in the world hitting its highest record of $69,000 on Tuesday, many Nigerian traders appear unwavering and are keen on continuing reaping from the rewards investing in crypto sometimes offers.
“Delisting naira on Binance will only make funding of wallet a little bit difficult, but this will not affect the crypto market in any way,” Uche, another trader, based in Lagos said. “The truth is that there’ll always be a way to trade crypto.
Explaining how it works, Uche said that “a cryptocurrency is a decentralised form of currency that limits the government’s control over the transactions.”
“Unless they want to block all internet connectivity in Nigeria, Nigerians will trade crypto,” he added.
“In fact with the delisting of naira on Binance,” Uche predicts that the “disparity between the parallel and official market will widen.”
“Banning Binance is not going to help the naira because people wishing to continue trading will rely on private vendors, which will cause vendors to increase their prices,” Uche added.
However, the Owerri-based trader mentioned earlier identified the challenge the ban will have on the country’s growing appetite for crypto.
“The ban does have an implication, especially for people who want to get into cryptocurrency trading. It will remove the trust factor in Nigeria’s crypto space. There will be a fear factor for ‘newbies’ as they will be discouraged from investing their money. However, anybody who has been trading for a while knows there’s a way to keep trading, even on Binance.”
