The Central Bank of Nigeria (CBN) is escalating its fight against cryptocurrency, issuing a directive to banks to freeze accounts associated with major crypto trading platforms Bybit, KuCoin, OKX, and Binance. This move signals a wider crackdown on crypto activity in Nigeria, particularly targeting peer-to-peer (P2P) transactions that have grown in popularity since the CBN banned crypto transactions through banks in 2021.
The CBN's directive casts a wide net, aiming to capture Nigerians utilizing P2P transactions on these platforms to buy and sell Tether (USDT), a stablecoin pegged to the US dollar. Tether has become a popular instrument for Nigerians to store wealth and conduct transactions, bypassing fluctuations in the Nigerian naira.
The CBN claims this activity is undermining its control over the national currency and contributing to its depreciation. The bank has previously accused Binance of manipulating the naira/dollar exchange rate. In February 2024, the Nigerian Communications Commission (NCC) restricted access to Binance's website, alongside those of other crypto exchanges.
Nigerians have flocked to P2P transactions on these platforms to continue their crypto activity. Bybit, KuCoin, and OKX have all seen a surge in Nigerian users in recent months. The CBN's latest move suggests they aim to cut off this alternative channel, making it significantly more difficult for Nigerians to engage in cryptocurrency transactions.
The effectiveness of the CBN's directive remains to be seen. P2P transactions are inherently decentralized, making them more difficult to regulate. Tech-savvy Nigerians may find ways to continue their crypto activity using virtual private networks (VPNs) or offshore exchanges. However, the CBN's actions create significant uncertainty for Nigerians invested in the cryptocurrency market.
The CBN's stance reflects a broader global debate over cryptocurrency regulation. While some countries are embracing cryptocurrencies, others, like Nigeria, are wary of their potential to destabilize financial systems. The CBN's actions may discourage international crypto companies from operating in Nigeria, hindering the growth of the country's fintech sector.
