The Nigerian government has reversed the 2021 crypto ban imposed by the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) but also caused some access issues for certain crypto platforms, thereby confusing the cryptocurrency community.
In February 2021, a crypto ban was announced, stating that financial institutions were not to be involved in facilitating cryptocurrency transactions and should rather close users’ accounts. It provoked anger and critique of Nigeria by the global crypto sphere because Nigeria is one of the biggest and most expanding markets for digital coins on earth.
The Nigerian government, however, surprised many people when it backtracked on the decision and stated that it would allow cryptocurrency exchanges to operate in the country if they possessed a license from the SEC. This move was viewed as a positive step for digital currency markets because it could foster more creativity, capital inflow, and control.
SEC points out that some of the conditions for obtaining a license include minimum paid-up capital of NGN 500 million ($340,343) and application fees amounting to NGN 30 million ($20,420). SEC, in addition, specified that they would collaborate with CBN to ensure that crypto activities were protected by regulations.
Crypto Exchange Access Woes Spark Concern
However, on the evening of 21st February 2024, the crypto community in Nigeria experienced yet another setback when some users came out to report that they could not access several crypto exchanges’ websites, such as Binance and OctaFX, among others using usual telecommunication service providers leading to speculations of either a new government ban on digital money platforms or just an issue with the telecom companies.
Binance tweeted that it acknowledges the access challenges they are currently facing and will soon fix them. It also advised clients to trade virtual currencies through its mobile app or P2P platform in Nigeria. According to OctaFX, a leading forex broker, there were access issues, and its users had to apologize for this experience. It advised the users to use its mobile app, web platform, or MetaTrader platform.
Naira’s Decline And Crypto Impact
The naira’s decline has been blamed on the crypto industry, specifically OTC traders who exchange USDT for naira on the P2P market by the government. The government has accused these OTC merchants of creating an artificial lack of dollars and putting some pressure on the rate of exchange.
Nathaniel Luz, however, a co-founder and the chief marketing officer of Flincap, a local over-the-counter digital money trading platform, denied that. He said that the current economic conditions are not induced by falling oil prices or devaluation of naira as claimed by the government.
I have seen different things in life. I have studied central banks and currencies. But, I have yet to see a government lay the responsibility for its currency failing as the Nigerian government is doing today, said Nathaniel.
Luz explained that the naira’s value is affected by various factors that are unrelated to the virtual assets trade industry, such as excess naira, insufficient dollars, heavy reliance on imports, people emigrating and exchanging currency, and uncertainty about Eurobond payments.
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