A fresh crypto crackdown is brewing in Nigeria

The love-hate relationship between Nigerian financial authorities and the country's crypto exchange platforms is not going away anytime soon. Under a new move to control a currency crash, the government is reportedly scapegoating digital currency exchanges, with plans to shut them out, yet again.

Though the regulators, the Nigerian Communications Commission (NCC) the Securities Exchange Commission (SEC), and the central bank are yet to release public notices on the matter, it is alleged that the NCC has directed telecom operators to interfere with the operations of players like Binance, OctaFX, Coinbase, Kraken and FXTM.

Yesterday, the Special Adviser on Information and Strategy to the President Bola Tinubu administration, Bayo Onanuga, called on the central bank, as well as the Economic and Financial Crime Commission to begin making moves to rein in crypto industry players.

“Binance, facing regulatory showdown in many countries, and causing disruptions in the currency market, should not be allowed to dictate the value of the naira, not on its crypto exchange platform. Other crypto platforms such as Kucoin and Bybit should be banned from operating in our cyberspace. FX platform Aboki should be re-banned", Onanuga said.

“The EFCC and the CBN should move against these platforms trying to manipulate our national currency to Ground Zero. Crypto should be banned in our country or else this bleeding of our currency will continue unabated,” he added.

This comes 2 months after the country's apex bank, under the new governorship of Olayemi Cardoso, started walking back its 2-year restriction on the use of personal and commercial bank accounts for the facilitating of cryptocurrency transactions.

Sources near regulators say the fresh movement against the industry is inspired by the belief that digital currency exchanges have been weaponized by currency speculators and money laundering groups for dubious activities that undermine the strength of the naira against the dollar.

Nigeria's foreign exchange woes have not gone undocumented, causing worry among investors and the population at large. The depreciation against the dollar and other major foreign currencies has not only exacerbated hardship but also triggered an exodus of multinational consumer goods actors.

At the close of last week, the naira-dollar exchange rate stood above N1,500 to $1 in the official FX market, and up to N1,800 in the informal domain, reflecting a 230% loss of value in a year's frame. The depreciation is contributing to inflation and rising social instability.

To look into the issue, authorities are joining forces to clamp down on dollar racketeers. Crypto exchange platforms are caught in the melee, with no choice but to liaise with the regulators, attempt to address the concerns, and allay the fears of financial authorities towards the sector.

Case in point, Binance, which is at the forefront of crypto trading in Nigeria and the world, put caps on peer-to-peer transactions using the USDT/NGN pair and stopped users from selling USDT on its platform.

“To protect users, and to prevent any abuse, our system automatically pauses in the event of a period of significant currency movement. Late last night, we observed a temporary suppression of prices that briefly reached our system limit. We quickly made the necessary adjustments to allow trading to continue,” Binance shared in an official blog post.