Crypto exchange Binance has removed Nigeria’s fiat currency, Naira, from the national currencies it supports on its peer-to-peer (P2P) platform.
Meanwhile, the Financial Times reported that two Binance executives have been detained in the country, with their passports seized. The Binance employees had traveled to Nigeria to resolve the country’s ban on crypto exchange websites.
Nigeria has the highest peer-to-peer volume in the world due to the high level of adoption in the country.
The development comes amid increasing regulatory concerns about Binance’s role in Nigeria’s foreign exchange challenges.
P2P Exchange Rate Concerns
Last week, the Nigerian government restricted access to the online platforms of various crypto firms, including Binance.
The regulators argued that this would prevent what they perceived as ongoing manipulation of the foreign exchange market and the unlawful movement of funds.
See Also: Binance Announced To List Four Altcoins Trading Pairs To Its Platform
However, as is well known in the crypto industry, the exchange rates on P2P markets are not controlled by crypto exchanges — rather, the rate is the price at which two individuals agree to trade their assets.
The “open-market exchange rate,” as it is often called, is determined by people participating in P2P markets involving unstable fiat currencies. The exchange rates often fluctuate heavily depending on market conditions and are usually above the interbank rate.
This is the first time a government has blamed crypto exchanges for the open market rates of their currency.
It’s worth noting that the Nigerian Securities and Exchange Commission (SEC) declared Binance’s operations illegal in 2023, citing its lack of registration in the country.
Unverified $26 Billion Transaction
Olayemi Cardoso, the governor of Nigeria’s Central Bank, recently told local media that Binance Nigeria allegedly facilitated the transfer of $26 billion from unidentified sources last year.
Cardoso said:
“In the case of Binance, In the last one year, 26 billion dollars has passed through Binance Nigeria from sources and users who we cannot adequately identify.”
Local media reported that Cardoso also reiterated the ongoing clampdown on crypto platforms and revealed the collaboration between federal agencies to curb the foreign exchange rate distortions.
He reportedly said:
“[The authorities] are determined to do everything it takes to ensure that we take charge of our market or put it differently to not allow others to manipulate our markets in a way that ends us distortionary and sub-optimises for all Nigerians.”
Nigerians Remain Pro-crypto
Meanwhile, Nigeria’s young, tech-savvy population has shown keen interest in cryptocurrencies despite the government’s recent stance.
Victor Asemota, a prominent tech entrepreneur in Nigeria, highlighted the nation’s reliance on cryptocurrencies for cross-border transactions, citing a lack of alternative reliable channels.
Asemota added:
“You can’t kill crypto, it will just become more hidden and more sinister. What is within the control of the government is to make other channels more efficient. Crypto is not easy to use but it becomes easier when there are no choices. Provide easier choices and people will use them.”
Exactly!! People can’t separate speculation from genuine economic activity on a channel that happens because of friction elsewhere. The first day I realized that crypto was more of a trader or importer thing in Nigeria was when I knew it was going to become very big.
It is big… https://t.co/47Hs96cTW7
— Osaretin Victor Asemota (@asemota) February 28, 2024
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