Crypto Challenges in Nigeria: CBN’s Moves, Binance Restrictions, and Calls for Bans

The Central Bank of Nigeria (CBN), guided by its constitutional roles and functions, recently issued directives significantly impacting the cryptocurrency market.

According to the CBN Act of 2007, the bank holds responsibilities for overall control and administration of monetary and fiscal sector policies.

On February 3, 2024, the CBN directed International Monetary Transfer Operators (IMTOs) to cease facilitating dollar transfers to and from Nigeria, emphasising inbound transfers quoted at the nation’s official foreign exchange market (FX).

As the naira faced a downward trend, reaching an all-time low of N1,730/$, the Economic and Financial Crimes Commission (EFCC) responded with raids on Bureau De Change operators suspected of speculating against the naira.

The naira’s depreciation, attributed to strong demand for dollars, raised concerns among individuals traveling for business, tourism, education, and health.

Additionally, a twist emerged when the government instructed telecom firms to restrict access to cryptocurrency websites, including Binance, OctaFX, and Coinbase, aligning with previous actions against crypto transactions.

In December 2023, the CBN reversed its stance on crypto assets, asking banks to disregard the February 2021 ban on crypto transactions.

However, the recent restrictions on crypto websites aim to curb currency speculation, as exemplified by Binance users’ complaints about the inability to buy dollars.

Binance, a major cryptocurrency platform, clarified its commitment to a market-driven, fraud-free platform and acknowledged working with regulators.

The Nigerian Communications Commission (NCC) later instructed telecom firms to block access to cryptocurrency websites, further tightening the crypto landscape.

Despite these challenges, the cryptocurrency market continues to thrive in Nigeria, reflecting its significance. In 2022, 45% of Nigeria’s population engaged with or owned cryptocurrency, topping global rankings.

With VPNs becoming a potential recourse for crypto traders facing access restrictions, the community explores avenues to navigate the evolving regulatory landscape.

While VPNs offer privacy, anonymity, and the ability to overcome online censorship, the legal implications and the government’s commitment to forex reforms introduce uncertainties.

Some government officials, like Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy, have called for banning platforms like Binance, accusing them of manipulating the naira.

Amid the complexities surrounding VPN usage and potential government actions, the fate of cryptocurrency trading in Nigeria remains uncertain.

As stakeholders advocate for a transparent dialogue with regulators, the cryptocurrency community explores ways to adapt to changing regulations and safeguard its interests.