Amid increasing global scrutiny of digital currencies, Binance continues to increase the regulatory wrath in Nigeria. Reportedly, the Association of Bureau De Change Operators of Nigeria (ABCON), is urging the government to prohibit the activities of Binance within the nation.
Notably, ABCON is a self-regulatory body established in Nigeria which serves as an umbrella for all the central bank-licensed Bureaux de Change (BDC). This recent action comes in response to the association reportedly recognizing Binance as a significant contributor to the pressure on the Naira, Nigerian currency, which has underwent significant devaluation recently.
According to local media reports, Alhaji Aminu Gwadabe, president of ABCON, emphasized that Binance trading has increasingly established itself as a central point for both the investor and exporters window as well as the country and parallel market. This highlights that the platform records remarkable liquidity, with 1.2 million transactions occurring every second.
In an August 8 interview, the ABCON president remarked that this stands as a competitive challenge, of which the solution lies in prohibiting the crypto exchange. Furthermore, he stated that the sole strategy to achieve this is by bolstering liquidity of financial institutions.
Sources reveal that the recent speech of the ABCON president noted a transition from a positive outlook to a negative one in the prevailing landscape of the Nigerian foreign exchange market. Gwadabe also emphasized that the prevalence of pessimism in the market’s sentiment has the potential to induce a decrease in the confidence of citizens.
Notably, the Nigerian Securities and Exchange Commission (SEC) warned crypto investors about engaging in trading activities on Binance on July 28. This advisory added references to an older circular that had been issued to address the activities of a deceitful entity unlawfully exploiting the Binance brand.
In response, the global brand issued a cease and desist notice to Binance Nigeria for its local operations in the country. Notably, the regulatory agency reiterated that the platform lacks the necessary power to operate within the country and stressed that its operations are in violation of the law.
Nigeria has adopted a cautious approach to the whole crypto assets sector while concurrently advocating for its central bank digital currency (CBDC) amid increasing economic distress like currency devaluation and inflation. Simultaneously, the citizens have enthusiastically adopted crypto assets like BTC, etc.
In the context of Binance, the crypto exchange has been coming under the radar of the regulators across the globe. The trail of trouble started for exchange in March when the US commodities regulator filed charges against the exchange for violating the federal commodities laws.
Following that, in June, the US Securities and Exchange Commission (SEC) accused the exchange of operating without a license and offering unregistered securities. It also claimed that Binance and CEO Changpeng Zhao (CZ) commingled users’ funds.
In response to both of these lawsuits, the crypto exchange is trying to put up a good fight highlighting the loopholes in the existing system and the regulators’ behavior. To the CFTC’s lawsuit, Binance submitted a motion in the US court accusing the CFTC of overstepping its regulatory boundaries and engaging in regulatory overreach.
Additionally, it is worth noting that the troubles for the exchange are gonna take a long time as the US DoJ is also investigating the exchange for money laundering concerns and violating economic sanctions on Russia. Notably, these allegations echo with what the French regulators have charged Binance with.
Recently, the French authorities revealed that the exchange has been under investigation since February 2022 for operating without a license and for concerns of using crypto assets to facilitate money laundering practices. On top of it, amid the global crackdown, many countries have risen against the exchange including Brazil, Netherlands, France, Austria, Cyprus, and Germany.
While some have sided with Binance in this regulatory war, a significant portion of its users have also raised their speculations and have got nervous following the crackdown evident through the high outflows especially after the crypto exchange halted some of the services. However, it is important to note that the authorities need to execute a more comprehensive approach and find middle ground to ensure safety to investors’ assets.