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Binance Suspends Deposits in Nigeria Following Central Bank Directive

  • Posted On - 2021-02-08 11:16:08

The Central bank of Nigeria told financial institutions they couldn't provide cryptocurrency companies or users with services on Friday.

The largest cryptocurrency exchange, Binance has temporarily suspended deposits Nigerian naira – country’s local fiat currency –  at this moment in response to a Friday letter from Nigeria’s central bank (CBN) instructing local banks to identify and close all accounts tied with cryptocurrency platforms and operations.

The CBN letter said to local banking institutions that dealing in cryptocurrency or facilitating transactions for cryptocurrency exchanges is prohibited under a 2017 circular stating bitcoin (BTC) and other cryptocurrencies are not legal tender in the country. This move might impact fiat on- and off-ramps, most of the nation’s crypto trading occurs on peer-to-peer platforms and remains unaffected, as per to sources in Nigeria.

In a statement, Binance reported its Nigerian naira payment partners suspended deposit services until the next notice, starting from 7 p.m. local time (GMT+1) as of Friday, adding that it is monitoring the situation closely. 

“Withdrawal services have remained normal and it will continue to be processed but might take slightly longer time than usual,” the statement said. 

Central bank ban

The CBN directive comes just months after protesters in the country used bitcoin to raise funds after authorities presumably shuttered those bank accounts in mass associated with the movement. 

From the time letter started making rounds on the internet, Nigerian crypto users tweeted the hashtag #WeWantOurCryptoBack over 26,000 times, according to data reported from SproutSocial. 

However, professionals traders in the crypto space do not believe this panic will last, or it will have any huge impact on the crypto adoption. 

Nigeria-based software and blockchain engineer Tosin Olugbenga told CoinDesk the CBN may have issued the directive because of  the bitcoin price run of 2020 and growing interest in cryptocurrencies worldwide and that is causing Nigerians to convert their fiat to crypto. 

“They’re converting money from naira to crypto. That is what the CBN identified and has taken issue with. Mind that, It is not banning crypto trading, It’s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance,” Olugbenga said. 

Olugbenga added “most crypto transactions in Nigeria happen on peer-to-peer exchanges, so once the panic dies down trading is going to continue as it is. 

“The news has caused a panic in the crypto space, especially for new crypto investors, but the true essence of crypto is decentralization. Majority of crypto trades that occur in Nigeria are peer-to-peer,” Aronu Ugochukwu, CEO of Xend Finance, told CoinDesk. 

So far, the CBN has not provided any official reason for the immediate order that is going panic through the media. 

Nigeria is the latest government to take an interest in regulating the space: India is once again in talks to ban private cryptocurrencies. Meanwhile, the president of the European Central Bank, Christine Lagarde, said bitcoin facilitates questionable transactions and it needs to be regulated on the global scale.