Recently, Bayo Onanuga, a special adviser to Nigerian President Bola Tinubu, made strong accusations against Binance, a cryptocurrency exchange platform. He claimed that Binance was “blatantly setting exchange rates for Nigeria, hijacking CBN role.” Onanuga urged the EFCC and CBN to take action against platforms like Binance that he believes are manipulating the national currency. He went as far as calling for a ban on cryptocurrencies in the country to prevent further damage to the economy.
Following Onanuga’s remarks, Binance’s peer-to-peer platform for Nigerian users temporarily paused trading after users reported difficulties selling USDT above a certain price. This led to frustrations among users as the country’s fiat currency experienced record lows against the US dollar. Many traders turned to alternative platforms like KuCoin and ByBit to continue trading stablecoins. Ray Youssef, the former CEO of Paxful, even recommended his new platform, noOnes, as an alternative to Binance.
The Role of Binance in Nigeria
Despite the criticism and challenges faced by Binance in Nigeria, the platform has become a popular choice for Nigerians looking to invest in digital assets as a hedge against inflation and currency devaluation. The Binance P2P platform has also played a significant role in price discovery for foreign exchange traders in the country. However, the Central Bank of Nigeria (CBN) has expressed concerns about the impact of speculative trading on the economy and currency stability.
Nigeria emerged as one of the largest peer-to-peer markets in the world after the CBN initially banned financial institutions from facilitating crypto trades in 2021. Although the ban was lifted with strict regulations imposed, the popularity of cryptocurrencies, especially trading in stablecoins like USDT, continued to grow. Data from Binance indicates that significant trading activity involving the USDT/NGN pair has been recorded in the past day, highlighting the country’s reliance on cryptocurrency trading platforms.
Binance’s Response
In response to the accusations and challenges faced in Nigeria, Binance clarified that it is not a price discovery platform. The exchange emphasized that market forces determine prices on its platform and that it does not intend to replace official currency pricing in Nigeria. However, the platform’s popularity and influence on the country’s currency market cannot be ignored, especially as more Nigerians turn to cryptocurrencies as a way to safeguard their investments.
Overall, the impact of Binance on Nigeria’s currency market is complex and multifaceted. While the platform has provided opportunities for Nigerians to participate in the global digital asset market, it has also faced criticism and regulatory scrutiny for its role in shaping exchange rates and market dynamics. As the country continues to navigate economic challenges and currency instability, the future relationship between Binance and Nigeria’s financial ecosystem remains uncertain.