In Nigeria, the recent clampdown on Binance naira operations has drawn criticism from experts and crypto enthusiasts alike, who foresee a rise in youth unemployment as a likely consequence.
Addressing reporters separately, the experts stressed the necessity for the government to seek out more viable solutions to the country’s existing foreign exchange challenges.
Shedrach Israel, an economist affiliated with Lotus Beta Analytics, likened the government’s recent decision to “treating malaria with paracetamol,” suggesting it may not effectively address the underlying issues.
He maintained that the prohibition of Binance would not adequately deal with the diminishing worth of the naira.
“I don’t know why the cryptocurrency is being seen as sabotage on the exchange rate because the cryptocurrency is not the major means by which the dollar is flowing in Nigeria. Banning Binance is like giving a malaria patient paracetamol. Although paracetamol may cure the pain of malaria, it does not cure
“Similarly, banning Binance has not stopped the naira from falling because the issue is bigger. Binance is just a bit of how much liquidity the dollar has in Nigeria,” he argued.
Israel has urged the Central Bank of Nigeria (CBN) to conduct an inquiry into the foreign exchange holdings of prominent Nigerian politicians.
“These people, whether politicians or private citizens, who have stored up forex should be made to convert their money to naira, otherwise, the ban would not be effective.
“Although the CBN governor claimed about $26bn had left Nigeria through Binance unaccounted, the fact is that Binance uses peer-to-peer trade, which means that there is inflow and outflow of naira in the economy. If $26bn has gone out, how much has come in? Binance is not our problem. Some Bureau de Change operators are possibly richer than Binance users,” he added.
The National Bureau of Statistics’ unemployment data revealed that the youth unemployment rate among those aged 15 to 24 was 7.2 percent in the second quarter of 2023, marking a slight increase from 6.9 percent in the preceding quarter.Over 22 million people, constituting 10.3 percent of Nigeria’s total population, are believed to be currently engaged in digital currency ownership.
In September 2023, the Securities and Exchange Commission of Nigeria issued a firm statement, explicitly stating that Binance Nigeria was not registered with nor subject to regulation by the SEC.
The official statement explicitly classifies the operations of the prominent global cryptocurrency exchange within Nigeria as unauthorized and illegal.
This official announcement definitively labels the operations of the widely recognized global cryptocurrency exchange within Nigeria as illegitimate and unauthorized.
During December 2023, the apex bank’s position on crypto assets in the country underwent a significant transformation, leading to its directive for banks to disregard its earlier ban on crypto transactions.
Read more: Binance To Put Naira Transactions On Hold
However, John Odiba, a cryptocurrency trader, suggested that the consequences of Binance’s exit from Nigeria could bring about both negative and positive impacts, with the positive outcomes being more significant in the long run.
“The effect of Binance’s exit on Nigerian users can be both positive and negative. One of them is that it could lead to decreased liquidity in the Nigerian cryptocurrency market, resulting in higher transaction costs and less favourable trading conditions for users. Nigerian users may face some limitations in accessing certain cryptocurrencies and trading pairs that were previously available on Binance, potentially hindering their investment opportunities,” he said.
On the positive side, he said the absence of Binance could create space for local cryptocurrencies like the eNaira to thrive.
“The absence of Binance could create space for local cryptocurrency exchanges to thrive, offering Nigerian users more options tailored to their needs, in the long run,” he said.
Relying on insights from Godwin Ojonugwa, a dedicated advocate for digital currencies, it’s evident that his financial backbone lies in the bustling ecosystem of Binance’s peer-to-peer trading.
According to his account, he successfully financed his education and constructed a comfortable residence solely through his trading endeavors.
Sharing his worries, he lamented the adverse consequences of the current restrictions on his business, expressing genuine fears about the prospect of being rendered jobless.
He said that Binance had made him a millionaire and allowed him to finance his education and build his first house through Binance trade. He expressed concerns that the ban on Binance had made conducting business challenging and he feared the possibility of unemployment.