Cryptocurrency Experts Reveal ‘Danger’ Of Binance Exit From Nigeria

Binance’s exit from Nigeria could potentially exacerbate youth unemployment in the country, according to experts and cryptocurrency enthusiasts.

Naija News reports that the Cryptocurrency giant Binance Holdings Ltd announced last week that it was leaving the Nigerian market and discontinuing all its services for the naira. In an official statement on its website, the firm said the crypto exchange will automatically convert naira balances to USDT from March 8 at 8:00 a.m. UTC but will cease support for NGN deposits after 14:00 UTC today. According to the crypto company, withdrawals will become unsupported after March 8 at 6:00 a.m. UTC, adding that the conversion rate for automatic conversions will be 1 USDT per 1,515.13 naira. However, experts in this field have expressed their concerns over the recent prohibition of Binance naira operations in Nigeria, urging the government to explore more effective strategies for handling the country’s ongoing foreign exchange difficulties. An economist at Lotus Beta Analytics, Shedrach Israel, during an interview with journalists, remarked that the government’s recent action is akin to “trying to cure malaria with paracetamol”. He argued that the ban on Binance will not resolve the depreciation of the naira. “I don’t know why the cryptocurrency is being seen as sabotage on the exchange rate because the cryptocurrency is not the major means by which the dollar is flowing in Nigeria. Banning Binance is like giving a malaria patient paracetamol. Although paracetamol may cure the pain of malaria, it does not cure the sickness. “Similarly, banning Binance has not stopped the naira from falling because the issue is bigger. Binance is just a bit of how much liquidity the dollar has in Nigeria,” Israel told The PUNCH. He also urged the Central Bank of Nigeria (CBN) to investigate the forex holdings of top Nigerian politicians. “These people, whether politicians or private citizens, who have stored up forex should be made to convert their money to naira, otherwise, the ban would not be effective. “Although the CBN governor claimed about $26bn had left Nigeria through Binance unaccounted, the fact is that Binance uses peer-to-peer trade, which means that there is inflow and outflow of naira in the economy. If $26bn has gone out, how much has come in? Binance is not our problem. Some Bureau de Change operators are possibly richer than Binance users,” he added. According to a report by the National Bureau of Statistics (NBS), the unemployment rate for youth aged 15-24 in Q2 2023 was 7.2%. Naija News understands that this figure shows a slight increase from the previous quarter, where the rate stood at 6.9%. Recent data also suggests that approximately 22 million individuals, accounting for 10.3% of Nigeria’s total population, currently possess digital currency. In September 2023, the Securities and Exchange Commission of Nigeria released an official statement explicitly stating that Binance Nigeria is not registered or regulated by the SEC. This declaration classifies the operations of the well-known global cryptocurrency exchange as illegal and unauthorized within Nigeria. However, in December 2023, the central bank altered its position on crypto assets in the country and instructed banks to disregard the previous ban on crypto transactions. A cryptocurrency trader, John Odiba, mentioned that the impact of Binance’s departure from Nigeria may have both positive and negative consequences, but he believes that the positive outcomes will prevail in the future. “The effect of Binance’s exit on Nigerian users can be both positive and negative. One of them is that it could lead to decreased liquidity in the Nigerian cryptocurrency market, resulting in higher transaction costs and less favourable trading conditions for users. Nigerian users may face some limitations in accessing certain cryptocurrencies and trading pairs that were previously available on Binance, potentially hindering their investment opportunities,” he said. Odiba mentioned that the lack of Binance could potentially pave the way for the success of local cryptocurrencies such as the eNaira. “The absence of Binance could create space for local cryptocurrency exchanges to thrive, offering Nigerian users more options tailored to their needs, in the long run,” he said. As per a cryptocurrency enthusiast named Godwin Ojonugwa, his primary source of revenue comes from engaging in Binance peer-to-peer transactions. He mentioned that he managed to finance his education and construct a suitable residence solely through this trading activity. Expressing concern, he stated that the existing limitations have adversely affected his business, leading to fears of potential unemployment. “Binance has made me a millionaire. I went to school and built my first house with Binance trade. Banning it has made business difficult and I am afraid of becoming unemployed,” he said.