Binance has capped the selling price of Tether (USDT) on its peer-to-peer trading platform to ensure it complies with local Nigerian authorities.
Crypto exchange Binance has capped its USDT selling price on its P2P platform to comply with Nigerian authorities amid concerns about the depreciation of Nigerian currency.
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— Binance Africa (@BinanceAfrica) February 20, 2024
Nigerian Government Concerned Over Depreciating Naira
Cryptocurrency exchange Binance has placed a limit on the selling price of USDT tokens on its P2P platform in order to comply with Nigerian authorities. Binance customers cannot sell Tether (USDT) above a 1,802 naira per USDT cap. The newly imposed price limit has blocked traders’ accounts trying to trade above it.
Binance introduced the selling price cap over concerns that speculators and money launderers are exploiting platforms such as itself, contributing to the devaluation of the Nigerian Naira. Concerned over the devaluation of its currency, Nigerian authorities are contemplating intruding stricter measures against crypto firms being used to facilitate such trades.
Binance explained to its Nigerian users that it is complying with Nigerian authorities, lawmakers, and regulators to ensure it takes action on users who do not adhere to the price cap. In a blog post, Binance said:
“We are dedicated to providing a market-driven, fraud-free, and manipulation-free platform for users. We take our responsibility to protect users very seriously. To be clear: if users are behaving in a malicious or manipulative way, they will be removed from the platform.”
The exchange’s peer-to-peer platform allows users to buy and sell crypto for fiat directly with other users. Binance explained the price cap blocks the accounts of traders attempting to sell USDT above it, which has led traders to other exchanges where they can do so without restriction.
In a separate blog post, the exchange responded to allegations of turning a blind eye to the Nigerian government’s forex (FX) wishes by setting a pegged rate to NGN/USDT trading. Binance said the peg is caused by an “automatic system pause.”
“To protect users and to prevent any abuse, our system automatically pauses in the event of a period of significant currency movement. Late last night, we observed a temporary suppression of prices that briefly reached our system limit. We quickly made the necessary adjustments to allow trading to continue.”
It also addressed concerns over its integrity in the matter:
“Don’t believe the FUD. We would like to assure users that their funds are secure and our peer-to-peer (P2P) product remains operational. Binance provides a P2P marketplace, not as a price discovery platform. To be clear: it is market-driven and is not intended to be a proxy for currency pricing in Nigeria.”
Nigerian Central Bank Relaxes Crypto Rules But Introduces Strict Banking Guidelines
In December 2023, the Central Bank of Nigeria (CBN) relaxed its restrictions on banks facilitating cryptocurrency transactions after imposing stringent restrictions on crypto trading in 2021. In 2021, the CBN ordered deposit-taking financial institutions to close accounts transacting or operating crypto exchanges, saying such activities were “prohibited.”
Global trends and demands, however, forced the CBN to re-evaluate its stance, conceding that “there is a need to regulate the activities of virtual asset service providers (VASPs)…”
After the CBN lifted the ban on banks’ operating accounts for VASPs, the Nigerian apex bank published guidelines for banks operating with VASPs. According to the guidelines, only naira-based accounts are permitted, and cash withdrawals are prohibited. Despite relaxing some of its rules, the CBN maintains its ban on financial institutions holding, trading, or conducting crypto transactions using their own accounts.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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