The Nigerian Government Considers Banning Binance And Other Crypto Platforms Due To The Fall In The Naira.
Over the past week, the Nigerian financial system has been on a rollercoaster as the whole nation watched the naira fall from N1490/$ to N1910/$. Nigerians were confused and demanded answers from the government as to why the naira had lost so much value in just seven days.
The Nigeria government had to take serious action to tackle these challenges and hence decided to block access to cryptocurrency firms. On February 22, 2024, he Nigerian Communications Commission (NCC) ordered telecommunications companies to block cryptocurrency websites, including Binance, Coinbase, and Kraken. This move seemed to contradict the Central Bank of Nigeria’s previous regulatory framework, which appeared to embrace digital assets. Some Nigerian users found it difficult to access the platform in the early hours of that day but are currently regaining access to the platform as the decision was halted. Although, that does not mean there are no more concerns about the effects of cryptocurrency or the best way to regulate it.
The government’s initial decision was motivated by several concerns. Firstly, the rampant manipulation of foreign exchange. Authorities suspect that crypto platforms like Binance are contributing to the depreciation of the naira. There are fears of money laundering and illegal financial transactions through crypto channels as there can be routine deployment of digital asset platforms for fake deals that affect forex values. These actions have caused artificial devaluation and deceptive trading practices.
To help mitigate the situation and win the trust of the Nigerian government, top crypto trading platform Binance decided to limit trading on the Naira for the USDT. This decision caused the naira to drop to around N1600/USDT.
These decisions came with mixed reactions. Some financial experts supported the initial move by the government. Stating that although these crypto platforms were not created for these illegal activities, it has allowed them to thrive on their watch. Other experts believe that as much as there might be fishy transactions occurring on Binance and other platforms, cryptocurrency is not a major factor in the current devaluation of the naira. They stated that it is due to the low production power of the nation, causing withdrawals of foreign investors that the government should be worried about.
What’s your take on the matter? Should the government tackle cryptocurrency activities to bring the naira back to its glory, or should they face other factors that might be causing this naira devaluation?
Share your thoughts in the comments section.
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