Binance has limited the selling price of Tether (USDT) on its P2P trading platform to comply with local authorities in Nigeria.
Cryptocurrency exchange Binance has limited the selling price of USDT on its P2P platform to comply with demands from Nigerian authorities amid concerns over the depreciation of the Nigerian currency.
We are committed to providing a market-driven platform for our users and working with local authorities and regulators.Read more 👉 https://t.co/d0dgnyAa5a pic.twitter.com/fHAm9gsm2V
— Binance Africa (@BinanceAfrica) February 20, 2024
Nigerian government fears devaluation of naira
Cryptocurrency exchange Binance has placed limits on the selling price of USDT tokens on its P2P platform to comply with regulations from Nigerian authorities. Binance customers cannot sell Tether (USDT) beyond the 1,802 naira per USDT limit. The newly imposed price limit resulted in the accounts of traders attempting to trade above that level being blocked.
Binance introduced selling price caps in response to concerns that speculators and money launderers like it were abusing its platform and contributing to the devaluation of the Nigerian naira. Nigerian authorities, concerned about the currency falling, are considering taking stricter action against cryptocurrency companies used to facilitate such transactions.
Binance explained to Nigerian users that it is complying with Nigerian authorities, lawmakers, and regulators to take action against users who do not comply with price caps. In a blog post, Binance said:
“We are committed to providing our users with a market-driven, fraud-free and manipulation-free platform. We take our responsibility to protect our users very seriously. To be clear, if a user behaves in a malicious or manipulative manner, they will be removed from the platform.”
The exchange’s P2P platform allows users to buy and sell cryptocurrencies for fiat directly with other users. Binance explained that it blocked the accounts of traders who tried to sell USDT above their price limits, redirecting them to other exchanges where traders could do so without restrictions.
In a separate blog post, the exchange responded to claims that it had ignored the Nigerian government’s foreign exchange (FX) wishes by setting a fixed exchange rate for NGN/USDT transactions. Binance said the peg was caused by an “automatic system pause.”
“To protect users and prevent abuse, the system automatically pauses when significant call movement occurs. Late last night we saw a temporary suppression of prices that briefly reached the system limit. We quickly made the necessary adjustments to enable us to continue trading.”
It also cited concerns about the integrity of the matter.
“Don’t believe FUD. We want to reassure our users that their funds are safe and that our peer-to-peer (P2P) product continues to function. Binance offers a P2P marketplace rather than a price discovery platform. To be clear, this is market driven and not intended to replace the price of the currency in Nigeria.”
Nigeria’s Central Bank eases cryptocurrency regulations but introduces strict banking guidelines
In December 2023, the Central Bank of Nigeria (CBN) relaxed restrictions on banks facilitating cryptocurrency trading after imposing stringent restrictions on them in 2021. In 2021, the CBN ordered deposit-taking financial institutions to close accounts trading or operating on cryptocurrency exchanges. It said such activities were “prohibited.”
However, due to global trends and demand, the CBN “needs to regulate the activities of virtual asset service providers (VASPs)… “I acknowledged this and reevaluated my position.
After the CBN lifted the ban on bank operating accounts for VASPs, the Nigerian apex bank issued guidelines for banks operating as VASPs. According to the guidelines, only naira accounts are allowed and cash withdrawals are prohibited. Despite relaxing some regulations, the CBN still prohibits financial institutions from using their accounts to hold, trade or conduct cryptocurrency transactions.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.