In response to regulatory pressure from Nigerian authorities, Binance, one of the world’s leading cryptocurrency exchanges, has enforced a limit on the selling price of Tether (USDT) tokens on its peer-to-peer (P2P) platform within Nigeria. Traders utilizing Binance’s platform are now restricted from selling USDT above a cap of 1,802 Nigerian naira per USDT.
The move comes as Binance seeks to ensure compliance with local regulatory frameworks and collaborate closely with Nigerian authorities, lawmakers, and regulators. Binance’s P2P platform enables users to engage in direct crypto-fiat currency transactions with other users.
Reports indicate that the imposition of the price cap has led some traders to seek alternative exchanges where they can trade USDT without such restrictions. Allegations have surfaced suggesting that Binance’s decision to set a pegged rate for NGN/USDT trading aligns with the desires of the Nigerian government to control foreign exchange (FX). However, Binance has clarified that the price peg resulted from an “automatic system pause,” triggered during periods of significant currency movement.
In a statement addressing concerns, Binance emphasized that the temporary suppression of prices is a precautionary measure, enabling necessary adjustments to be made to ensure the platform’s stability while allowing trading activities to continue uninterrupted.
“We are dedicated to providing a market-driven platform for users, as well as working hand in hand with local authorities and regulators,” stated Binance.
The Nigerian government, in collaboration with the Central Bank of Nigeria (CBN), has intensified efforts to combat forex speculation and address challenges impacting the country’s economic stability. According to officials, speculators—both domestic and international—have played a pivotal role in the devaluation of the naira, exacerbating inflation and contributing to economic volatility in Nigeria.
Nigeria emerged as the largest P2P market globally following the Central Bank’s prohibition on institutions from engaging in crypto transactions in 2021. However, a recent circular issued to banks in December 2023 lifted the ban, allowing Nigerian banks to facilitate cryptocurrency transactions.
Many Nigerians involved in foreign exchange transactions face difficulties when utilizing traditional banking and Bureau de Change channels due to high fees associated with transferring foreign currency within the banking system. Consequently, P2P transfers have become increasingly popular due to their lower transaction costs compared to traditional channels.
As regulatory dynamics continue to evolve, cryptocurrency exchanges operating in Nigeria are navigating a complex landscape, balancing regulatory compliance with providing accessible and efficient trading services to users.
