Binance Nigeria Limited is ordered to immediately cease soliciting Nigerian investors of any kind,” the Securities and Exchange Commission (SEC) said on Friday. The statement adds that the company is neither registered nor regulated, which makes its operations in the country illegal.
The Nigerian market regulator has ordered the world’s largest cryptocurrency exchange, Binance, to suspend operations in the country, saying that a local unit attracts Nigerian investors through the site is illegal.
Last year, Nigeria’s SEC issued a set of regulations for digital assets, signaling that Africa’s largest demographic is trying to find a middle ground between an outright ban on crypto assets. electronic devices and their use is not controlled.
Nigeria’s central bank in 2021 stop banks and financial institutions from trading or facilitating transactions in digital currencies. Last week, the U.S. (SEC) sued Binance and Coinbase for allegedly breaking their rules, detailing a list of 13 allegations against Binance, as well as its subsidiary and CEO. United States, Changpeng Zhao.
The U.S. federal government expressed its desire to bring order to the crypto markets in February, following the resounding bankruptcy of FTX, a platform that has long been through the cracks. cracking of the regulatory network.
According to cryptocurrency exchange platform Coinbase, around 50% of African citizens do not have access to banking services, which makes Bitcoin an attractive alternative.
To fill the banking gap, mobile phone companies have built a patchwork system around mobile wallets and payments linked to phone numbers – but most of these systems cannot. interoperable, and sending or receiving money from abroad often means high fees or resistance to government control of the currency. .
These points are some of the reasons why Sub-Saharan Africa is one of the fastest growing crypto markets in the world, according to Coinbase, “with 6% of all transactions being peer-to-peer, more than twice double rate of subsequent transactions.” nearest area.”
Another big reason: inflation. Many countries, including Nigeria, Ghana, Sudan, and Ethiopia, are struggling with high currency inflation, making cryptocurrencies a viable alternative.
In Zimbabwe, cryptocurrencies are booming to combat currency volatility and inflation. Despite the IMF warning, the Reserve Bank of Zimbabwe sold Z$14 billion worth of gold-backed digital tokens, worth about $39 million.
The gold-backed crypto tokens introduced in April are sold for a minimum price of $10 to individuals and $5,000 to corporations and other institutions. Africa has become the epicenter of crypto adoption as entrepreneurs in Ghana, Nigeria, and South Africa take the lead according to Coinbase
Need better regulation? According to Chainalysis, Africa is one of the fastest growing crypto markets in the world, but remains the smallest, with crypto transactions peaking at just $20 billion per month in mid-2021. .
The African Anglophone has the highest number of users in the region, as many use crypto assets for commercial payments, but their volatility makes them unsuitable as a store of value.
“Policymakers are concerned that cryptocurrencies could be used to illegally move money out of the region and circumvent local laws to prevent capital outflows,” the IMF said around 20% of countries in sub-Saharan Africa have banned crypto assets.
It also indicates that widespread use of cryptocurrencies can also undermine the effectiveness of monetary policy, creating risks to financial and macroeconomic stability.
