The Nigerian naira continues its downward spiral despite a tightening of the noose around cryptocurrency trading. The government, blaming digital assets for the currency’s woes, has launched a multi-pronged attack on digital assets, forcing major exchanges to withdraw and pushing traders down riskier paths.
Central bank points finger at crypto
The Central Bank of Nigeria (CBN) has named cryptocurrency as the villain in the naira depreciation drama. Officials allege widespread manipulation of the currency’s value through pumping and dumping schemes on peer-to-peer (P2P) platforms. According to them, this undermines their efforts to stabilize the naira through monetary policy.
Exchanges feel the heat
These accusations have had a chilling effect on digital currency companies. Fearing regulatory retaliation or an outright ban, major exchanges like Binance, OKX and, more recently, KuCoinhave all suspended support for the naira on their P2P platforms.
KuCoin, in an announcement released Wednesday, downplayed the significance of the move. “temporary break” to ensure compliance with local regulations. However, the lack of a clear timetable for recovery leaves Nigerian Bitcoin traders in limbo.
Looming P2P ban pushes traders into the shadows
The situation is likely to get worse as the Nigerian Securities and Exchange Commission (SEC) plans a complete ban on P2P crypto trading. This move, if passed, will effectively push crypto transactions into the shadows of encrypted messaging apps.
Experts warn that this change will expose merchants to a Wild West environment rife with scams, exploitation rates and a complete lack of consumer protection.
Central Bank freezes transactions, EFCC targets traders
The CBN does not just regulate trade. Over the past two weeks, they have asked financial institutions to freeze and report all cryptocurrency transactions. The move effectively cuts off any legal avenue for Nigerians to buy or sell cryptocurrencies using their naira.
Adding fuel to the fire, the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption agency, has frozen more than 1,000 crypto trader accounts in the past three weeks. These accounts are reportedly under investigation for money laundering and terrorist financing, allegations that many find questionable given the transparency inherent in blockchain technology.
The effectiveness of repression called into question
Despite the aggressive measures, the naira continues its downward trajectory. Currently, it is trading at a dismal price of 1,520 naira to the US dollar. This suggests that the crypto crackdown may be a misguided attempt to solve a complex economic problem with a technological scapegoat.
Lack of clarity frustrates businesses
The Nigerian government’s approach has also been criticized for its lack of transparency. Binance CEO Richard Teng shared his frustrations in a recent blog post, highlighting their year-long efforts to obtain licensing information from the Nigerian SEC, all to no avail.
This lack of a clear regulatory framework makes it impossible for legitimate crypto businesses to operate, further driving the industry underground.
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