Binance has temporarily suspended deposits in the Nigerian naira – the country’s local fiat currency – in response to a Friday letter from the Nigerian Central Bank (CBN) instructing local banks to identify and close all accounts that are are associated with cryptocurrency platforms or operations.
In the CBN letter, local banking institutions were told that trading in cryptocurrencies or facilitating payments for exchanging cryptocurrencies was not legal tender in the country, according to a 2017 circular listing Bitcoin (BTC) and other cryptocurrencies . While the move could affect fiat on- and off-ramps, most of the country’s crypto trading takes place on peer-to-peer platforms and remains untouched in Nigeria, according to sources.
In a statement, Binance announced that its Nigerian naira payment partners have suspended deposit services from 7:00 p.m. local time (GMT + 1) on Friday, adding that they are closely monitoring the situation.
“Withdrawal services will remain normal and continue processing, but may take a little longer than usual,” the statement said.
The CBN policy comes just months after protesters in Nigeria used bitcoin to raise funds after authorities reportedly closed bank accounts linked to the move.
Since the letter was posted online, Nigerian crypto users have tweeted the hashtag #WeWantOurCryptoBack over 26,000 times, according to SproutSocial.
However, crypto professionals do not believe the panic will continue or affect the adoption of crypto.
Nigeria-based software and blockchain engineer Tosin Olugbenga told CoinDesk that the CBN may have enacted the policy because of the 2020 Bitcoin price run, and growing interest in cryptocurrencies around the world is driving Nigerians to convert their earnings into crypto.
“They are moving money from naira to crypto. The CBN sees this and has questioned it. It doesn’t prohibit crypto trading. It just tells financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance, ”Olugbenga said.
Olugbenga added that most crypto transactions in Nigeria take place on peer-to-peer exchanges. Once the panic subsides, trading will resume as usual.
“The news has caused panic in the crypto space, especially among new crypto investors, but the real essence of crypto is decentralization. [The] Most of the crypto deals in Nigeria are peer-to-peer, ”Aronu Ugochukwu, CEO of DeFi platform Xend Finance, told CoinDesk via email.
So far, the CBN has not given an official reason for the sudden order causing panic over social media.
Nigeria is the youngest government interested in regulating space: India is again considering banning private cryptocurrencies. European Central Bank President Christine Lagarde said Bitcoin makes questionable transactions easier and should be regulated at a global level.
Read the following CBN letter: