In an unprecedented move, Nigeria has embarked on a rigorous campaign to stem the tide of its currency’s devaluation by blocking access to cryptocurrency exchanges. This bold step underscores the government’s determination to stabilize the financial situation in Africa’s largest economy, which has been grappling with a rapidly sliding Naira.

The Central Bank of Nigeria (CBN) recently lifted its restrictions on cryptocurrency transactions in commercial banks in December 2023. This decision comes after two years of waiting, during which crypto enthusiasts and companies yearned for the apex bank to lift the ban.

The CBN recognized that current global trends necessitate regulation of crypto activities, acknowledging that virtual asset service providers (VASPs), including cryptocurrencies and crypto assets, play a significant role in today’s financial landscape.

Press Release from Binance

However, Nigerian authorities have taken a compelling step by imposing a ban on accessing cryptocurrency exchanges. The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) jointly directed telecommunication companies to block access to crypto companies, their websites, and applications.

This move aims to curb perceived manipulation of the foreign exchange (FX) market, a claim which the government refuted but many Crypto like myself have haven’t been able to connect some Airdrop sites and some relatively slow to access at the time of writing this post.

As a result of this directive, some Nigerian users are currently unable to access major crypto platforms like Binance, Kraken, and Coinbase through local networks. Even initial access that was granted through some selective applications has been revoked.

The government’s decision to clamp down on crypto exchanges follows concerns over continuous FX market manipulation, which the government believes is contributing to the rapid depreciation of the Naira.

Government officials, including Bayo Onanuga (the Special Adviser to the President on Information and Strategy), have called for regulatory action against market manipulation by crypto platforms, specifically singling out Binance. Binance has been accused of setting exchange rates and operating beyond regulatory oversight.

Interestingly, this development contrasts with events just over a year ago when the CBN imposed a ban on crypto transactions between banks, exchanges, and individuals. However, in December 2023, the CBN lifted its restrictions on banks facilitating cryptocurrency transactions.

The future of digital asset adoption in Nigeria remains uncertain. While the government aims to stabilize the Naira by banning access to crypto exchanges, this move may prove to be a hurdle for the country’s development of the crypto industry. Crypto users in Nigeria remain optimistic and hope for eventual access to crypto exchanges once again.

Apparently, the government have not been able to follow through the process, mode of trading operations of the blockchain, Pricing is not determined by set of individuals but on the sole forces of supply and demand, market forces suchlike demand and supply result in up/downwards in prices of crypto asset. Crypto traders have the peculiarities in determining price according to demand and real market value of a said coin which is the purpose of decentralization.

P2P is a free market, the CBN can go on Binance P2P and sell their own dollars for let’s say 800 NGN/$ and march trade with other merchants who they claim are selling above the proscribed government exchange rate. Total volume on Binance today is barely $30 million. In the kind of scenario, the Central Bank of Nigeria should bring out $100 million, counter crypto traders by crashing prices in Binance if they so see crypto p2p trades as conventional bank trading, crypto prices hedge on value of demands and supply.

Also, CBN and the Nigerian government should fix the problem from its core, which is the Naira value to the Dollar $, bring it down to let’s say 100 naira to the dollar, how? Increase oil output to 1.8M barrel per day. Maintain consistency for two quarters then lobby OPEC to increase allocation. Secondly attract private equity capital.

Thirdly, cutting down of our bourgeoisie government circle, which translate to cutting down of unnecessary frivolities in government structure. Above all incubation of production mechanism as against dependency on imports should be an aggressive drive of Nigeria.

The CBN has released guidelines for banks and other financial institutions when operating with entities that provide crypto services. While banks can now facilitate crypto transactions, they are prohibited from trading, holding, or transacting cryptocurrencies directly. Here are some key points from the guidelines:

Banking Relationships with VASPs: Banks are allowed to open accounts for crypto companies (VASPs), provide them with designated settlement accounts, and act as channels for foreign exchange flows and trade.

Licensing Requirement: Crypto companies wishing to use banks must obtain a license issued by the Nigerian Securities Exchange Commission (SEC) to operate.

I expect crypto companies to urgently look in the way of its users in order to maintain her leverage, and more so, negotiate a soft laden with the government, this is crypto where centralization and government interference isn’t treated with levity by crypto natives. The government should find ways to balance the Naira against the US Dollars and not to subjugate legitimate organizations into shifts, not healthy for the crypto industry.

The outcome of the rift between the government and cryptocurrency in Nigeria might be a long haul as many crypto degenerates are scaping for leverage in order to continuing trading with many joggling from Telegram OTC to local merchant via P2P channel.

Everyone knows my testimony: Nigeria worked for me. It provided me EVERYTHING a young man would have wished for. So, my desire daily is that Nigeria works for others, and that is why we try to explore how we can have a working nation. On that, I do hope the Nigerian government considers this observation from Peter Obi:

“A situation where at the point of initiating importation, Form M and other documents related to importation are based on a particular rate of exchange, for example, N1000 to $1, being the prevailing exchange rate at the time which the importer of goods was used to calculate the entire process, from the import initiation to receipt of goods in his warehouse. Then suddenly when the goods arrive in Nigeria, and duties are calculated at different rates, say N1400 to $1, it becomes a serious business challenge that results in business losses,” Peter Obi said.

Floating Naira does mean we cannot honour contracts. I have posited that Customs should not become a blinded rainmaker for Nigeria as doing that we will make it a poison pill: the more radical revenue from Customs, the more Nigeria’s economy is dying since these revenues are import-driven, not export-driven.  We must ask the government to allow predictability in the market system.

The newspapers and TV pundits hailed that for the nation. Yet, if you look deeper, you will notice one thing: Nigeria is becoming a trading hub as companies shift to export instead of make in Nigeria, since the Customs revenue is not coming from exports as ships are still leaving our ports largely empty. Also, these are not equipment and machinery; these are basic imports of household and business consumables which ought to be made in Nigeria.

Again, we commend the Customs team but we must not celebrate these huge numbers. For everything, the double digit growth we’re seeing in the customs revenue will remind us that Nigeria is being de-industrialized!