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Breaking news: Ethereum Developer Virgil Griffith Pleads Guilty to Conspiracy Charge in North Korea Sanctions Case

Binance Suspends Deposits in Nigeria Following Central Bank Directive

Nigeria's central bank told financial institutions they couldn't provide crypto companies or users with services on Friday.

Feb 5, 2021 at 10:08 p.m. UTC
Updated Sep 14, 2021 at 12:08 p.m. UTC

Binance has temporarily suspended deposits in Nigerian naira – the country’s local fiat currency – in response to a Friday letter from Nigeria’s central bank (CBN) instructing local banks to identify and close all accounts tied to cryptocurrency platforms or operations.

The CBN letter told local banking institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited under a 2017 circular stating bitcoin (BTC) and other cryptocurrencies are not legal tender in the country. While the move might impact fiat on- and off-ramps, most of the nation’s crypto trading occurs on peer-to-peer platforms and remains unaffected, according to sources in Nigeria.

In a statement, Binance announced its Nigerian naira payment partners suspended deposit services until further notice, starting from 7 p.m. local time (GMT+1) as of Friday, adding that it is monitoring the situation closely. 

“Withdrawal services remain normal and will continue to be processed but might take slightly longer time than usual,” the statement said. 

Central bank ban

The CBN directive comes just months after protesters in Nigeria used bitcoin to raise funds after authorities reportedly shuttered bank accounts associated with the movement. 

Since the letter started making rounds on the internet, Nigerian crypto users tweeted the hashtag #WeWantOurCryptoBack over 26,000 times, according to data obtained from SproutSocial. 

But professionals in the crypto space do not believe the panic will last, or it will have any impact on crypto adoption. 

Nigeria-based software and blockchain engineer Tosin Olugbenga told CoinDesk the CBN may have issued the directive because of  the bitcoin price run of 2020 and growing interest in cryptocurrencies worldwide is causing Nigerians to convert their earnings to crypto. 

“They’re moving money from naira to crypto. That is what the CBN sees and has taken issue with. It is not banning crypto trading. It’s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance,” Olugbenga said. 

Olugbenga added that most crypto transactions in Nigeria happen on peer-to-peer exchanges, so once the panic dies down trading will continue as usual. 

“The news has caused a panic in the crypto space, especially for new crypto investors, but the true essence of crypto is decentralization. [The] majority of crypto trades that occur in Nigeria are peer-to-peer,” Aronu Ugochukwu, chief executive officer of DeFi platform Xend Finance, told CoinDesk via an email. 

So far, the CBN has not provided an official reason for the sudden order that is sending panic through social media. 

Nigeria is the latest government to take an interest in regulating the space: India is once again considering a ban on private cryptocurrencies. Meanwhile, the president of the European Central Bank, Christine Lagarde, said bitcoin facilitates questionable transactions and should be regulated on a global scale.  

Read the CBN letter below:

Letter issued by the Central Bank of Nigeria on Feb. 5, 2021

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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