It is indeed unfortunate to hear that Nigerian authorities have taken steps to block access to several prominent cryptocurrency exchanges globally. The government’s efforts to curb currency speculation in light of the significant depreciation of the Nigerian naira to unprecedented lows is understandable, but it is unfortunate for those who rely on such exchanges for their financial transactions. Let’s hope that the Nigerian government can come up with more effective solutions to stabilize their currency without hindering the ease of conducting transactions globally.
The Nigerian government has blocked access to major cryptocurrency exchanges in an attempt to curb currency speculation amid the weakening naira. The Nigerian Communications Commission (NCC) reportedly instructed telecom companies to limit consumer access to platforms like Binance, Coinbase, and Kraken, resulting in intermittent access to these sites for consumers. It seems that the latest move by the Nigerian government to restrict access to major cryptocurrency exchanges marks a shift in attitude towards digital assets. Previously, the government had been pursuing market-friendly reforms to attract overseas investment, including a drive to regulate cryptocurrencies, which were seen as potential rivals to traditional assets. The government even lifted a ban on crypto transactions in place to improve money laundering and terrorism financing standards. However, the recent move to restrict access to these exchanges is seen as an attempt to regain control of the country’s currency system, which includes multiple exchange rates and a years-long currency peg. The naira has been rapidly depreciating, hitting a record low of 1,600 to the dollar on Wednesday, compared to less than 900 at the start of January.
cryptocurrency exchanges have played an important role in establishing unofficial market prices for the naira, with the prices quoted on Binance often serving as a benchmark for local foreign currency exchange rates. Local traders also use the exchange to trade between the naira and tether, the world’s largest stablecoin, which is pegged to the US dollar. However, a special adviser to President Tinubu, Bayo Onanuga, accused Binance of “blatantly” setting the exchange rate for Nigeria and taking over the Central Bank of Nigeria’s role as the main currency rate setter. He called for a ban on cryptocurrency in Nigeria, blaming it for the bleeding of the country’s currency.
A spokesperson for Binance has commented on the recent restrictions on its website in Nigeria, saying that “some users in Nigeria are experiencing issues accessing binance.com, as well as other platforms in the industry,” but added that users’ funds are secure. The Nigerian Communications Commission did not respond to requests for comment, and neither did Coinbase nor Kraken. Despite Nigeria being second only to India in the proportion of private wealth stored in cryptocurrency last year, analysts suggest that interest in digital assets is mainly limited to young investors who have lost trust in the naira as a reliable store of value. The government has taken unorthodox measures to defend the declining value of its currency in recent years, including shutting down price-setting websites and cutting down trees to prevent the activities of parallel market traders. A local Binance entity was declared illegal by the Nigeria Securities and Exchange Commission last year, but consumers have still been able to access the international Binance.com site. In November, Binance paid a $4.3bn penalty after pleading guilty to US criminal charges related to money laundering and breaching sanctions, and its founder Changpeng Zhao stepped down as CEO.
