EXPLAINER: Is Binance’s exit from Nigeria a ‘blessing’ for the naira?

Technology tamfitronics Binance is a cryptocurrency substitute platform founded in 2017 by Chinese-Canadian developer, Changpeng Zhao (aka CZ).

Zhao’s firm, Beijie Technology, created the bogus after successfully raising $15 million.

Binance started operations in Nigeria around 2020, but has now discontinued operations because the federal government considers it as the biggest threat to the naira.

This followed the decision of the government to impose restrictions on cryptocurrency exchanges as part of attempts to stop the falling value of the local currency.

Recall that the Central Bank governor, Olayemi Cardoso, said at the end of a recent Monetary Policy Committee (MPC) meeting that cryptocurrency exchanges were conduits for money laundering.

He singled out Binance as the most significant culprit.

“In the case of Binance, over the past twelve months alone, $26bn has passed through Binance Nigeria from sources and users whom we cannot adequately name.” he added.

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With the continued weakening of the naira, crypto exchanges had been viewed as a way for Nigerians to protect their money against the currency’s weakness.

For the reason that govt floated the naira in Could per chance per chance, the forex has fallen very a lot to the greenback to spherical N1,900 to $1, before it step by step began to acquire strength to the contemporary N1,300/$

The government accused crypto exchanges of distorting foreign exchange rates and contributing to the naira’s weakening.

Bayo Onanuga, a media adviser to President Tinubu, insisted that Binance was sabotaging the nation’s economy by influencing exchange rates.

“This is why the government moved against Binance,” Onanuga told Come Up News in February.

“Some people sit online using the internet to dictate even our exchange rate, hijacking the role of the Central Bank of Nigeria.”

How Binance ended operations in Nigeria

As the battle with the Nigerian government persisted, Binance in an email sent to its Nigerian users said it was shutting down all its naira-based products and services on March 8.

“This affects NGN products and services only, you can continue to use products and services for other available cryptocurrencies,” the crypto giant said in the email sent to users.

In fact, two officials of the company flew into Nigeria to negotiate with the government over the exit but were detained and their passports seized.

Binance has denied any wrongdoing in a statement posted on its site last month. However, Nadeem Anjarwalla, one of its top executives, escaped from custody at an Abuja guesthouse a few days ago using a smuggled passport, according to the National Security Adviser, Mallam Nuhu Ribadu.

How does Binance work?

Binance’s Exchange allows users to trade fiat for Bitcoin or other coins. It offers several ways to buy crypto on Binance, including P2P trading where Binance provides a peer-to-peer (P2P) trading service, which connects traders and sellers of cryptocurrency directly. This facilitates fiat payments, with a wide range of payment options that depend on users’ preferences.

Moreover, Binance had partnered with Simplex to produce a brokerage service supporting credit and debit cards. This service permits one to purchase a variety of cryptocurrencies with a credit or debit card, apart from using these cards to deposit fiat currency into your account. Nonetheless, this service comes at a premium that can be as high as 4.5% in fees for USD deposits using a debit card. SEPA/Wire transfers

In the same vein, Binance Futures, which was launched in 2019, allows traders to speculate on the price of (rather than buy and sell) Bitcoin and many popular cryptocurrencies, including Bitcoin Cash, Ethereum, Litecoin, Ripple and more.

The platform allows leveraged trading, which means that traders can multiply their profits (but also losses) by 20 times. Binance Futures balances are held separately from users’ regular trading accounts and must be funded with Tether (USDT) as collateral. All profits and losses will also be realized in USDT.

The user interface for Binance Futures looks nearly identical to the Binance spot trading interface, except for a few additional functions for controlling leverage and viewing open positions.

Fee Systems and Currencies of Finance

There are over 500 coins available to trade, deposit and withdraw on the platform, including major altcoins such as: Bitcoin (BTC) Ethereum (ETH) Litecoin (LTC) Ripple (XRP) Bitcoin Cash (BCH) Chainlink (LINK) Binance Coin (BNB) and Binance USD (BUSD).

Others include Basic Attention Token (BAT) Cosmos (ATOM) Dash (DASH) EOS (EOS) Nano (NANO) Paxos Standard (PAX) TRON (TRX) TrueUSD (TUSD) Tether (USDT) Stellar Lumens (XLM).

What are experts saying?

The Chief Technology Officer (CTO) at Record Innovation Limited, Japheth Johnson said it is highly unlikely for the federal government to believe that Binance is responsible for the free fall of the Naira.

He said, “For a nation of over 200 million, one company cannot be responsible for the free fall of the Naira. This is because there are various factors that the federal government has turned a blind eye to.

“For example, the EFCC has pointed out that the majority of frauds are facilitated by banks, yet no one is speaking up. Moreover, the CBN has indicated that it is promoting foreign exchange to only Bureau de Change Operators. Why not the banks? If we can deposit and withdraw our naira in the bank, why can’t we also do the same with dollars?”

He further noted that cryptocurrency companies continue to support government initiatives through regulatory measures such as Know Your Customer (KYC) policy.

“We totally support the government’s policy and regulations on Know Your Customer for every cryptocurrency dealer because it could actually help curb money laundering and various illicit financial transactions. Nonetheless, the government needs to adopt a more diplomatic approach in legislation,” he said.

Johnson further said that Binance is no longer basically the most attention-grabbing platform for cryptocurrency transactions and with the exit of Binance, many Nigerians can also fair mosey searching for that you simply would per chance well be ready to mediate of alternate concepts.

A crypto dealer, Adamu said the exit of Binance had a negative impact on the financial system, adding that Binance has nothing to do with the current state of the Naira.

He said “I don’t know why the authorities reached the conclusion that Binance is the cause of our foreign exchange crisis and liquidity. The banks are complicit and there is no form of illicit transaction that is not also occurring in the banks using the dollars. So I ask, is it Binance that was to blame for the Naira crashing to about N1,900 to $1? Definitely not,” he said.

Speaking on its impact on the financial system, he said, “Binance has kept about 10 million Nigerians in legitimate employment and any institution that can provide such a platform for earnings by citizens of a nation, the government must look at it in a positive light rather than humiliate it, and it could actually have an impact on the financial system.”

Adamu added that instead of addressing issues that are causing multinational companies to leave Nigeria, such as high costs of doing business and taxes, the government was making things worse.

He added Nigerians are smart people and the exit of Binance would mean that various decentralized crypto exchanges would spring up, just like the way Twitter was banned and Nigerians subscribed to VPN to tweet.

Speaking on ways to allow Binance to operate freely without harming the Naira, he said, “Binance should register fully in Nigeria in accordance with existing regulations.”

“I think that’s the main thing to do and also give a boost to the Know Your Customer Policy. One thing I know is Binance takes its KYC seriously, because the amount CBN is claiming went through Binance is not something you could even imagine. You can only deposit but cannot transfer such an amount through Binance,” he added.

Daily Trust also reports that an IT expert, Professor Haruna Chiroma, said the exit of Binance from Nigeria will have a significant impact on the income of internet service providers in the country.

Chiroma, a lecturer at Hafr Al-Batin University, Saudi Arabia, said the crackdown on Binance by the Federal Government would cause internet service providers to experience low traffic as demand for large volumes of data would decrease due to the crackdown.

The Saudi-based IT expert in a phone interview with our reporter added that the impact of the Binance crackdown would be greater on the economy than on IT infrastructure.

“From the perspective of the IT, the Binance is a crypto platform built on the blockchain applied sciences, thus, crackdown on the Binance can chop abet the expansion of blockchain expertise in Nigeria. Internet provider companies networks will most seemingly be aware low traffic as question for gargantuan volumes of info will chop abet resulting from the crackdown”, he said.

Originally reported by dailytrust.com. Adapted for our readers.