By Tony Obiechina
Against the backdrop of continued fall of the Naira, the Office of the National Security Adviser (ONSA) had recently announced that it would join forces with the Central Bank of Nigeria to clamp down on currency speculators and economic saboteurs.
There is no doubting the fact that the increasing scarcity of the dollar and its growing demand in Nigeria remain the principal reasons for the troubled Naira.
Infact as at Friday, the Naira’s summersaults reached an unimaginable low level of N2000/$1, even as analysts say that all is not well with the Naira.
According to financial experts the unwholesome activities by manipulators who operate through several digital channels are remotely contributing to naira’s weakness and even inflation, resulting to rising food costs and negating financial stability.
One of such unwholesome activities is the crypto environment that is largely not regulated by the Securities and Exchange Commission(SEC) and the Central Bank of Nigeria(CBN).
In other climes, especially the United States, there are regulatory frameworks for crypto environment and violations of any extant regulations attract severe sanctions.
Of particular note is Binance which has digital tentacles with large players here in Nigeria. The regulations inherent in the United States crypto space was enough to deal with violations by Binance and its management.
According to the US Justice department, Binance admitted it engaged in Anti-Money Laundering, Unlicensed Money Transmitting, and Sanctions Violations in Largest Corporate Resolution to Include Criminal Charges for its Executive.
The justice department further said “Binance Holdings Limited (Binance), the entity that operates the world’s largest cryptocurrency exchange, Binance.com, pleaded guilty and has agreed to pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA)”.
The company’s founder and chief executive officer (CEO), Changpeng Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA and has resigned as CEO of Binance.
In Nigeria, the concern now is how Binance and other digital assets platforms are serving as window for peer-to-peer (P2P) transactions giving opportunity to users to showcase interest to sell or buy currencies of their choice.
It is reported that 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 issued 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.
Consequently, in this unregulated market, individuals or groups place large buy or sell orders on the platform with no plans to execute them.
This development has therefore created a false illusion of high demand , influencing others to buy or sell at manipulated prices. This deceptive practice, targets unsuspecting investors, leaving them with significant financial losses and as in the case of naira.
However government crack down on the parallel markets has started yielding positive results as noticed in the reaction of the Association of Bureau De’Change Operators of Nigeria (ABCON). Its President, Mr. Aminu Gwadabe has commended the management of the CBN for the action.
He said, “for the past two and a half years this is the first time we have seen engaging and a listening CBN. We have seen how to collaborate to ensure that we get a solution on how we can solve the problem because it is a national crisis that’s where we are now.
“Two, we have witnessed a lot of raids and arrests I want to draw a caveat. Unfortunately there is stigmatisation and criminalisation of the sector due to lack of understanding even with the security agencies there is lack of clarification between who is licensed and who is not. So the raids that is going on, as a licensed Bureau De’Change a regulatory entity.
” For us we are licensed and regulated and as a licensed Bureau De’Change there are criteria, you must have an office, you must render returns you must comply with necessary regulations. What is happening is not targeted at licensed Bureau De’Change but the operator of FX street trading. For us we are against any street trading and we support any actions that will remove street trading. It affects me also, I have an office but my clients cannot come to my office because of the menace of street traders”.
“I want to congratulate the government, the CBN if it can be sanitize. We support any sanitization that can remove street trading. We have all seen it, there is no place on earth that you can go and see rampant street trading of FX so we’re in support of it”.
However, the recent pronouncement from the presidency in respect of how naira can be strengthened is a welcome development going by a statement from the office of the National Security Adviser(ONSA) it spoke of its synergy with the CBN to sanitise the foreign exchange market.
Similarly, Special Adviser to President Bola Tinubu on information and strategy, Mr Bayo Onanuga said Binance and other crypto platforms should be banned from operating in Nigeria.
In an X post on Wednesday, he also said foreign exchange (FX) aggregator, abokiFX, should be banned again.Onanuga made the statement while reacting to a comment by Mikael C. Bernard, an X user, who shared posts on cryptocurrency and FX rates.
The presidential aide said Bernard stated in an X post that “Naira is going to zero”.
Onanuga’s statement is coming amid the continuous depreciation of the naira, which fell to N2000/$ at the parallel section of the FX market on February 23, 2024.
In his post, the special adviser said Binance is “blatantly setting exchange rate for Nigeria,” and hijacking the role of the Central Bank of Nigeria (CBN). READ ALSO:
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He said the cryptocurrency trading platform is facing restrictions in multiple jurisdictions, such as the United States, Singapore, Canada and the United Kingdom.
It would be recalled that previous CBN guidelines, while aiming to curb banking involvement with crypto, leave the P2P space largely unsupervised and country is at the receiving end.
The vacuum created by non-regulation has allowed manipulative tendencies in P2P market, making the integrity of the market to nosedive, while eroding investor confidence.
Nigeria, and indeed the regulatory authorities should consider a review of the existing guidelines to check this menace, or probably liquidate their operations in the country as their activities pose a great risk to national security.
