Nigeria has accused cryptocurrency exchange Binance (BNB-USD) of undermining its plunging currency. In a curious turn of events, the Nigerian government has detained two senior Binance employees after inviting them to the country for meetings. Nigeria, the largest economy in Africa, has witnessed multiple currency crises. The advent of crypto, though, has meant people in markets facing high inflation resorting to transacting in crypto to escape inflation.
Impact of Cryptocurrency on Nigeria’s Currency
The Nigerian Naira is one of the worst-performing currencies of 2024. However, it boasts the second-highest rate of crypto adoption globally. Additionally, the Nigerian government’s policy of rationing the exchange of the Naira for the U.S. Dollar has led its citizens to increasingly turn to the safety of stablecoins. The value of a stablecoin is pegged to the dollar. Consequently, a black market has emerged for stablecoin trading, with Binance becoming the most prominent name associated with monitoring the black-market rate. According to the Wall Street Journal, Binance was accused of influencing the country’s exchange rate and assuming the role of its central bank.
Nigerian Government Response
Bayo Onanuga, a special adviser to Nigeria’s President, called for a ban on crypto in Nigeria. Since then, a new government has looked to simplify its mechanism of exchange rates. Binance is now cooperating with Nigerian Authorities with potential compensation from the exchange on the cards. The company is also working to reunite its detained employees with their families.
Binance’s regulatory troubles are well-documented. Last year, its Founder Changpeng Zhao pleaded guilty to violation of U.S. anti-money-laundering norms. In Nigeria, while its local services were shut down, users could still access Binance’s global platform.
For now, the Nigerian Government is said to have demanded $10 billion in penalties from Binance. However, the use of crypto continues to boom in economies, including Turkey and Russia, undergoing financial turmoil. With crypto going mainstream in the U.S. and the U.K. and Bitcoin (BTC-USD) scaling new muti-year highs, one can only expect the global adoption of crypto to accelerate in the coming periods.
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