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In a recent development, the Nigerian Securities and Exchange Commission (SEC) has cautioned local investors against using Binance, one of the world’s largest crypto exchanges. The SEC’s warning, issued on July 28, highlights that Binance lacks the necessary license to operate within the country and deems its operations as illegal.
The cautionary message comes as the SEC refers to a previous circular that was released to address a fraudulent company that had been illegally using the Binance brand. This recent warning reiterates the high level of risk associated with investing in the platform, potentially leading to a total loss of investments.
The situation further intensified in June when the SEC published a circular that restricted the activities of Binance Nigeria, warning investors and platforms about its illegitimate affiliation with the genuine Binance exchange. In response, Binance took action and issued a cease and desist notice to Binance Nigeria.
Interestingly, while Nigeria has been cautious about the crypto industry, it has been actively promoting its central bank digital currency (CBDC) known as eNaira. However, since its launch in 2021, the adoption rates of eNaira have fallen below expectations, prompting the central bank to explore various measures to boost its usage. In a bid to enhance contactless payments, the CBDC system was recently upgraded with near-field communication technology.
To regulate the crypto market, Nigeria introduced a 10% tax on gains from the disposal of digital assets, including cryptocurrencies, starting from May 2023. This measure has been met with mixed reactions from local stakeholders, with some considering it as “premature.”
As the Nigerian government keeps a watchful eye on the crypto industry, investors are urged to exercise caution and refrain from dealing with unlicensed entities like Binance, which pose potential risks to their investments.
