Update Feb. 21, 12:00 pm UTC: Paragraph added quoting Binance.
Binance has set a limit on the selling price of Tether (USDT) tokens on its peer-to-peer (P2P) platform to ensure compliance with local authorities in Nigeria. Traders on Binance cannot currently sell USDT above a 1,802 naira per USDT cap.
The crypto exchange told its Nigerian users it is committed to working hand in hand with local authorities, lawmakers, and regulators to ensure it acts on users’ noncompliance with the price cap. Binance P2P allows users to buy and sell crypto for fiat currency directly with other users.
The price cap blocked accounts of traders attempting to sell above it, leading traders to other exchanges to trade freely without restrictions. In response to allegations of bending a knee to the FX control desires of the Nigerian government by setting a pegged rate to NGN/USDT trading, Binance said the P2P price peg was caused by an "automatic system pause".
The exchange stated that its system automatically pauses in the event of a period of significant currency movement, and clarified that the suppression of prices is temporary as necessary adjustments have been made, allowing trading to continue.
We are dedicated to providing a market-driven platform for users, as well as working hand in hand with local authorities and regulators.
— Binance Africa (@BinanceAfrica) February 20, 2024
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Nigeria's Office of the National Security Adviser, in collaboration with the Central Bank of Nigeria (CBN), initiated a joint effort to combat forex speculation and tackle the issues affecting the country’s economic stability.
The initiative highlights that the activities of speculators — operating both domestically and internationally through different means — have played a significant role in the naira’s depreciation, exacerbating inflation and leading to economic instability in Nigeria.
The unification of forex windows by the Nigerian government in mid-2023 led to a significant fall of the naira against the United States dollar on the foreign exchange rate market, which doubled from about 700 naira/$1 to a historic high of over 1,500 naira/$1.
In July 2023, the Nigerian Securities and Exchange Commission (SEC) warned local investors against using Binance. The agency insisted that the platform had no license to work in the country and that its operations were illegal. It also reminded the public about the high level of risk and potential total loss of investments.
Related: Nigeria urged to regulate cryptocurrency to tackle financial crimes
Nigeria is currently the biggest P2P market in the world, which came about after the Central Bank of Nigeria banned institutions from buying and selling crypto in 2021. However, a circular sent to banks in December 2023 lifted the crypto ban on Nigerian banks facilitating cryptocurrency transactions.
Many Nigerians dealing with foreign exchange struggle to conduct transactions through traditional banking and Bureau de Change channels. This is due to significantly higher fees for transferring foreign currency within the banking system than in the crypto market, making P2P transfers more attractive.
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