Consequences Of Binance Ending Naira Trading For Nigerian Crypto Traders
On the 28th of Feb, Crypto traders in Nigeria were left in shock as Binance delisted & ended its p2p trading feature for the Naira on its platform.
This disappointing move by Binance came after a series of mind-boggling events that included unwarranted arrests, currency manipulation accusations, and an unjustified fine on the platform.
To know more about this and its consequences, keep reading.
A Little Backstory
The 5th of February, 2021, was a sad one for crypto enthusiasts in Nigeria, as the Central Bank of Nigeria banned all crypto trading activities within its borders.
The CBN cited money laundering and terrorism financing risks as grounds for the ban.
However, by December 2023, the CBN reversed this ban and applied strict regulations to the crypto industry in Nigeria.
Within the two years of the crypto ban, the crypto market in Nigeria grew at an exponential rate, with more Nigerians turning to crypto trading as their source of income and a means to receive money globally.
According to an article by Reuters, the volume of crypto transactions in Nigeria grew by over 9% ($56.7 billion) between July 2022 and June 2023.
The young tech-savvy population in Nigeria were the primary adopters of cryptocurrency thanks to the availability to trade crypto via peer-to-peer channels offered by various crypto exchanges in Nigeria.
Amongst these crypto exchanges majorly used by Nigerians to trade digital assets, the most used and trusted was Binance.
Binance is a global crypto exchange that provides many trading features to crypto traders on its platform. These features include P2P trading, spot trading, staking, crypto swapping, margin trading, futures trading, and many more.
Many crypto traders in Nigeria could leverage the features of Binance to trade crypto on various markets like the spot market, derivatives market, over-the-counter and so on.
However, Nigerians didn’t frequent the platform because of these features majorly. Instead, the P2P Naira to USDT trading feature was the biggest lure for Crypto traders in Nigeria.
With this feature, Nigerians could exchange crypto (majorly USDT) for Naira or vice versa within minutes with minimal costs.
This was a flexible way to get dollars into the hands of the masses without having to go to the bank to swap their Naira for dollars or vice versa.
Another lucrative thing about this form of trading for Nigerians was the rate at which Naira was traded. On the Binance platform, the Naira traded for a price slightly higher than what is sold in the banks.
Example: If Naira to USD was trading in the banks for N1400 to $1, on the Binance platform (and every other crypto platform in Nigeria), Naira to USDT would be selling for N1650 to $1. This was a lucrative means to earn more with Naira, thanks to its price.
Aside from this, Binance provided a lot of safety measures for both sellers and buyers on its platform, thereby making it a very secure platform to trade crypto safely. Nigerians also use the exchange to purchase their digital assets, which helps them safeguard their funds against rising inflation and currency devaluation.
An Unforeseen Discomfort
However, things changed when Binance automatically paused its P2P trading feature for Nigerians on the 22nd of February upon the Naira falling to N1900 against the crypto dollar (USDT).
Nigerians immediately took to X (formerly Twitter) to report difficulties selling USDT on the platform & aired their grievances on the unexpected pause.
Binance quickly acknowledged this problem and stated that it was a temporary fix to suppress the price of USDT against Naira prices. Binance further added that it has adjusted its system to address the issue and will immediately resume trading activities.
Although many frustrated crypto traders on the Binance platform quickly turned to alternative platforms like Bybit and Kucoin, Binance couldn’t keep to its word.
As of February 28th, Binance completely turned off the P2P trading feature for Naira on its platform. Binance announced that by March 8, it will no longer support Naira deposits and will halt all withdrawals made in Naira on its platform.
Binance further announced that after March 8, it will convert any remaining Naira-denominated balances in its Nigerian users’ wallets into USDT.
All existing Naira spot trading pairs, including the feature that allows traders to trade Naira for Bitcoin and USDT, will be delisted by March 7.
These events come right after a back-and-forth between the Federal government, Naira regulation, and Binance.
Before the 28th of February, the Central Bank of Nigeria (CBN) had tried to implement various measures to stabilise the fast-falling Naira and the economy but had no success.
The CBN, however, in its efforts to reduce the swift falling price of Naira, accused speculative Forex and crypto traders of exacerbating the country’s inflation and destabilising Nigeria’s financial economy by altering the cost of Naira and trading the Naira at a very high price.
Bayo Onanuga, a special adviser to President Bola Tinubu, accused Binance of setting the exchange rate for Naira, thereby taking over CBN’s role.
Various politicians, like Former presidential aide Bashir Ahmad, claimed that crypto exchanges helped worsen the Naira situation.
Bashir Ahmad stated that the reliance on crypto platforms not authorised to regulate forex led to fluctuations in exchange rates, affecting the Bureau De Change (BDC) and the banks.
Olayemi Cardoso, The Central Bank of Nigeria Governor, accused Binance of manipulating the foreign exchange rate through currency speculation and rate fixing while announcing in his press release that over $26 billion flowed through Binance Nigeria over the past year from unknown sources.
Binance immediately defended itself by stating that it wasn’t a price discovery platform or involved in manipulating the foreign exchange rate for Naira. Instead, exchange rates on its p2p market for Naira on its platform are determined by market forces such as supply and demand.
The federal government further went on to halt Binance and various other crypto exchange activities in Nigeria.
The FG also detained Binance’s two senior executives after they flew into the country as part of their moves to negotiate with the Nigerian government amid the halt on its platform in Nigeria.
Consequences
The unforeseen move by Binance to end Naira trading for Nigerian crypto traders has raised many questions on whether the federal government has fully embraced crypto trading in Nigeria.
So many Nigerians have taken to X to air their views on this move by Binance.
While some individuals believe that the value of the Naira cannot be reduced due to the Federal government clamping down on Binance, another set of individuals on X has praised this move by Binance as a means to give some stability to the Naira.
However, for crypto traders in Nigeria, this move by Binance does not significantly hinder NGN/USDT trading. Today, many crypto traders have shifted their trading activities from Binance to other P2P trading platforms like ByBit, Luno, Kucoin, Paxful, Bitmama, etc.
According to a user on X, “Before Binance came into Nigeria, Nigerians could swap USDT for Naira (vice versa), and even after Binance leaves, Nigerians will still be able to trade Naira for crypto.”
While this is true, some individuals believe that the federal government is less welcoming of Nigeria’s large crypto market. And there might be further halts on various crypto platforms in Nigeria if the Naira fails to become stable.
What Next!
Crypto trading in Nigeria can’t be stopped or halted.
According to Chainanalysis, Nigeria has earned itself a top spot for the most crypto-obsessed country in the world regarding the amount of Google searches for “cryptocurrency” or “buy crypto.
While we await the FGs next move to stabilise the Naira now that Binance has ended Naira trading, crypto traders in Nigeria can leverage several crypto platforms and individual traders on Telegram to continue trading and swapping Naira for USDT.
