Nigeria’s recent ban on end-to-end transactions involving its currency, the naira, on the Binance cryptocurrency exchange platform has sparked concerns among economic analysts and crypto enthusiasts. The move has raised worries about potential consequences, including increased youth unemployment in a country already grappling with soaring inflation.
The ban, which led to Binance disabling all its naira services, came after Nigerian authorities accused the company of exploitation, devaluation of the naira, and money laundering. This restriction on naira services remains in place, prompting criticism that it could exacerbate Nigeria’s economic challenges.
Authorities alleged that Binance manipulated exchange rates through speculation and rate-fixing, resulting in the devaluation of the naira. Additionally, the government accused the company of terrorism financing and money laundering, claiming that $26 billion worth of transactions on the platform were untraceable. Binance, however, denied any wrongdoing in a statement posted on its website.
Isaac Botti, a public finance expert, emphasized that transactions on Binance were not the root cause of Nigeria’s economic problems. He argued that the country’s economic challenges stemmed from reckless demand and utilization of hard currency, along with the volume of dollars released physically by the Central Bank of Nigeria.
Nigeria boasts 13 million cryptocurrency holders, the highest in any African country, with Kenya following closely at 4.4 million. In response to the ban, Binance announced that any remaining naira on the platform would be automatically converted to Tether, a cryptocurrency stablecoin pegged to the U.S. dollar.
Following last year’s introduction of currency controls and the cessation of petrol subsidies aimed at economic revival, the naira plummeted to record lows. Analysts expressed concerns that the government’s ban on Binance could lead to job losses. Blockchain expert Jahdiel Chidi acknowledged the potential for job losses but suggested that Nigerians might turn to new crypto exchanges to fill the gap left by Binance.
