Binance operates an independent entity dubbed Binance Nigeria Limited similar to the United States entity that was also deemed illegal earlier last week.
Cryptocurrency exchanges around the world have found themselves at loggerheads with several global regulators for offering digital assets without proper registrations. In the latest developments, both the Nigerian and the United States Securities and Exchange Commission (SEC) have intensified the crackdown on unregistered crypto exchanges. Reportedly, Binance Nigeria has been operating a crypto exchange without the proper regulatory approvals required for securities.
This comes after the Nigerian Central Bank tried severally to ban crypto assets to ensure the success of the digital Naira. Moreover, the Nigerian SEC noted that all crypto assets are unregistered securities.
However, Nigerians have been using crypto assets en masse to hedge against rising inflation. For instance, Bitcoin prices in Nigeria-based crypto exchanges are often double the standard prices as the demand exceeds local supply.
Notably, the announcement by the Nigerian Securities and Exchange Commission increased the overall BNB sell pressure in the past few days. According to the latest crypto price oracles, BNB traded around $227, down more than 25 percent in the past seven days.
What Next for Binance Nigeria
Arguably, the adoption of crypto assets in Nigeria is critical for the financial growth of the West African nations. Moreover, out of 220 million people in Nigeria, the youths below the age of 35 years are the most and majorly unbacked. As a result, crypto exchanges have significantly been used as a digital banking system, thereby threatening the traditional banking sector.
According to the Nigerian SEC, Binance Nigeria should cease soliciting local investors to trade digital assets immediately. Similarly, the regulator warned local investors that they lack the necessary protection once they invest in crypto assets and could lose all their entire investments.
“Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal. Any member of the investing public dealing with the entity is doing so at his/her own risk,” the Commission noted.
Notably, the global Binance Holding Limited nor Chief Executive Officer (CEO) Changpeng Zhao (CZ) were not mentioned in the announcement, thus suggesting crypto investors can tap into the exchange for investments.
— Binance Nigeria (@binance_naija) June 10, 2023
Nonetheless, the Nigerian SEC is committed to regulating all crypto exchanges with the help of other regulatory agencies in the country. Moreover, the new president Bola Tinubu took over a struggling economy with extremely high unemployment among other financial constraints. The 71-years old president has moved against digital assets to restore the use of the Naira both physically and digitally.
“The Commission shall provide updates on further regulatory actions with respect to the activities of Binance Nigeria Limited, and other similar platforms and shall work with other regulators in Nigeria to provide further guidance on this matter,” the announcement concluded.