Access to Crypto Exchanges has been banned by Nigerian Authorities

Why-CBNs-Ban-on-Crypto-Could-Leave-Nigeria-in-a-Financial-Stone-Age1

Corroborating earlier reports of a ban on cryptocurrency exchanges, the Central Bank of Nigeria, in collaboration with the Nigerian Communications Commission (NCC), has directed all telecommunications companies in the country to restrict access to crypto companies’ websites and applications. This is part of the government’s desperate efforts to prevent the naira from falling further.

On Wednesday evening, it was confirmed that the websites of cryptocurrency exchanges such as Binance, Kraken, Coinbase, OctaFX, and others were no longer available to Nigerian customers. Still, many users continued to have access to applications, particularly Binance.

However, in the early hours of Thursday, we can confirm that the application of the crypto exchange, Binance, is no longer available using Nigerian telecoms such as MTN, Glo, and Airtel, except for people using Starlink.

According to sources, Nigerian officials are taking this action to prevent what they regard as ongoing manipulation of the foreign exchange market, as part of measures to prevent the local currency from falling precipitously. Following claims that speculators utilize peer-to-peer markets to weaken the naira dramatically, the government decided to take action against Binance and other cryptocurrency enterprises.

On Wednesday, Bayo Onanuga, the President’s Special Adviser on Information and Strategy, urged the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) to crack down on online platforms such as Binance and other cryptocurrency companies for alleged foreign exchange market manipulation.

In a statement on his X account, Mr. Bayo said:

The Naira-Dollar manipulators

I chanced on an X post Tuesday night by one Brother Bernard @Mikael C Bernard who railed against what he called the order of the EFCC, NSA on Finance to set a cap on traders selling USD tokens for Naira equivalent.

He disclosed that token sellers… pic.twitter.com/c9YBjawJMz

— Bayo Onanuga (@aonanuga1956) February 21, 2024

A history of cryptocurrency regulation in Nigeria.

In February 2021, at the start of the previous bull run, the Central Bank of Nigeria (CBN) threw a regulatory curveball at the country’s crypto aficionados by prohibiting transactions between banks, crypto exchanges, and individuals.

The Central Bank’s decision to impose the ban in 2021 stems from worries about the possible hazards linked with cryptocurrency transactions.

However, in December 2023, after nearly three years of maintaining a full crypto ban on banks dealing in digital currencies, the CBN finally removed its prohibitions on Nigerian banks supporting cryptocurrency transactions.

In a circular sent to banks on December 22, 2023, the CBN acknowledged that the growing worldwide demand and usage of cryptocurrency make it untenable to continue the harsh limitations put on financial institutions in 2021.

The lifting of the February 2021 restriction was a watershed moment for Nigerian cryptocurrency aficionados, indicating a realization of the changing reality and the need to achieve a balance between regulation and innovation.

With the barrier eliminated, Nigerian cryptocurrency users may once again deal effortlessly through their bank accounts, restoring normalcy to the expanding Nigerian crypto industry.

Unfortunately, the optimism about the unlimited possibilities in the Nigerian crypto business has been short-lived, since another crypto embargo was imposed exactly three years after the February 2021 episode.

Just that this time, it is more severe because all access to crypto exchanges via local networks has been disabled, as opposed to the February 2021 prohibition on banks’ contact with crypto exchanges.

Is the naira’s collapse due to crypto P2P exchanges?

Many think pieces are circulating about the link between digital asset trading on peer-to-peer marketplaces and the decline of the Nigerian local currency.

In a statement provided to a source, Nathaniel Luz, CEO of Flincap, stated that every good partnership is built on mutual trust and understanding.

“However, it appears that the government of Nigeria is not interested in having a positive connection with the folks in the cryptocurrency space.

According to Nathaniel, the Nigerian authorities’ ‘finger-pointing’ is completely incorrect, as OTC dealers cannot be responsible for the naira’s current market price.

“The crypto industry has not played any part in the current failing state of the economy and the fall of the naira.”

Nathaniel Luz connects this development to the former CBN governor’s actions against abokiFx and other FinTech businesses. According to him, people have lost faith in the naira, and these activities are not helping to restore that trust.

“It’s really a trust issue. People do not trust the government’s activities or the naira. What the government should be doing right now is attempting to rebuild and recoup this trust, not exacerbating the problem.”

Author

Joshua Samuel

A conscientious writer with a knack and passion for story telling which spans across different sectors and segments. I love telling stories in writing and bringing quality, authentic and timely information to everyone everywhere.

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