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- The Nigerian Federal Government is clamping down on exchanges like Binance and Kraken.
- Major digital currencies like Bitcoin, Ripple (XRP) and USDT are poised to be impacted.
In a bid to stabilize its plummeting national currency, the Naira, Nigeria has resorted to drastic measures, including a ban on Bitcoin (BTC), and Ripple’s XRP, in addition to blocking access to major crypto exchanges.
Rationale Behind Nigerian Government’s Action
The Financial Times reported that the Nigerian Communications Commission (NCC) has ordered telecom firms to block consumer access to key crypto platforms’ websites, including Binance, Coinbase, and Kraken. Consequently, consumers experienced limited access to these sites on Thursday, February 22, signaling a clampdown on crypto trading in the country.
Bayo Onanuga, Special Adviser of Information and Strategy to the President of Nigeria, confirmed the government’s action on the X platform, stating that the report from a local news media was correct.
“Forex Crisis: Nigerian govt blocks Binance, OctaFX, Coinbase, others,” he noted.
Premium Times is correct.
Forex Crisis: Nigerian govt blocks Binance, OctaFX, Coinbase, others https://t.co/cq6DoxqInj
— Bayo Onanuga (@aonanuga1956) February 22, 2024
It is worth noting that cryptocurrency exchanges, particularly platforms like Binance, have played a pivotal role in establishing unofficial market prices for the naira, thus undermining government efforts to control its valuation. The move to block access to these platforms aligns with the government’s objective of regaining control over the currency valuation of the naira.
Furthermore, Onanuga reiterated the government’s stance, emphasizing the need to ban cryptocurrency to prevent further depreciation of the naira. This decision echoes the government’s previous ban on crypto trade in 2021.
However, despite regulatory restrictions, crypto transactions in Nigeria surged by 9% year-on-year to reach $56.7 billion in June 2023. Notably, between August 2021 and July 2023, crypto exchanges in Nigeria recorded stablecoin transactions worth up to $60 billion, indicating a robust demand for digital assets in the country.
Moreover, the Central Bank of Nigeria (CBN) recently approved the African Stablecoins Consortium (ASC) to introduce a new stablecoin, the cNGN. Scheduled for launch on February 27, 2024, the cNGN aims to comply with regulatory requirements set forth by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU).
Impact of Nigeria Bitcoin Ban on Financial Independence
Nigeria’s adoption of stringent measures to defend its currency underscores the challenges it faces in managing economic stability. The naira has experienced a sharp depreciation, losing over 70% of its value since the Central Bank lifted its dollar peg in June 2022.
Moreover, inflation in Nigeria soared to 28.92 percent last year, reaching 29.9 percent in January, according to the International Monetary Fund (IMF). This economic turbulence has fueled demand for cryptocurrencies like Bitcoin and XRP, perceived as a hedge against inflation.
As of press time, leading crypto assets have exhibited slight declines in the last 24 hours. Bitcoin, after a recent surge, is trading at $51,000, down by 1.35%, while XRP is trading at $0.534, down by 2.75%. The trading volume for XRP has also witnessed an 18% decrease, amounting to $1.1 billion. These fluctuations in cryptocurrency prices reflect the ongoing impact of regulatory actions and economic instability in Nigeria.
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