By
Mayowa Adebajo
May 9th, 2024
Despite regulatory challenges, Nigeria has emerged as one of the fastest-growing crypto economies globally.
Binance, one of the world’s largest crypto exchanges has made a big decision to suspend all services involving the local fiat currency, the Nigerian naira (NGN) this week. The move comes amidst escalating regulatory scrutiny and concerns over illicit activities.
Timeline of Binance’s Exit from Nigeria
Officially unveiled today, Binance said withdrawals in NGN will be suspended after March 8, with remaining NGN balances automatically converted to the Tether (USDT) stablecoin. Binance noted that the conversion rate for NGN to USDT will be based on the average closing price of the USDT/NGN trading pair on Binance Spot over the last seven days.
Accordingly, the exchange has urged users to take necessary actions, such as withdrawing NGN, trading their assets, or converting NGN into cryptocurrencies, before the specified deadlines.
In addition to suspending NGN withdrawals, Binance said it would cease NGN deposits immediately after 2:00 pm UTC on March 5. All trading pairs involving NGN will be removed from the platform on March 7. Binance’s payment service, Binance Pay, will also eliminate NGN from the list of supported payment options on March 6.
The decision to withdraw from the Nigerian market follows mounting regulatory pressures and allegations against Binance. The Central Bank of Nigeria’s governor, on February 27, voiced concerns about crypto exchanges in Nigeria allegedly facilitating illicit transactions, citing “suspicious flows” of funds at Binance.
This assertion is compounded by an earlier report from the Nigerian Securities and Exchange Commission (SEC) in which Binance Nigeria was accused of operating an illegal crypto exchange and was urged to cease soliciting local investors.
Furthermore, Nigeria’s National Security Adviser reportedly confiscated the passports of two Binance executives in Abuja, the country’s capital. This heightened scrutiny prompted the Nigerian House of Representatives Committee on Financial Crimes to summon Binance CEO Richard Teng to address the allegations.
Crypto Ecosystem in Nigeria
Despite regulatory challenges, Nigeria has emerged as one of the fastest-growing crypto economies globally. In September 2023, Chainalysis ranked Nigeria second in the world for cryptocurrency adoption.
Additionally, in January, the Central Bank of Nigeria authorized the Africa Stablecoin Consortium (ASC) to pilot its cNGN stablecoin, aimed at bridging the gap between the naira and digital currencies through blockchain technology.
However, regulatory authorities in Nigeria have shown a less welcoming stance towards the rapid adoption of cryptocurrencies. In February 2024, an adviser to Nigeria’s president advocated for banning Binance, KuCoin, and other crypto trading platforms in the country, echoing the Central Bank’s previous ban on regulated financial institutions providing services to crypto exchanges.
Notably, Nigerians have increasingly turned to cryptocurrencies as a hedge against rising inflation, with Bitcoin prices on local exchanges often exceeding global averages due to high demand. The cessation of Naira services on Binance will undoubtedly affect Nigerian traders and investors, who must now seek alternative platforms for their crypto transactions.