Binance has implemented restrictions on the maximum selling price of Tether (USDT) tokens on its peer-to-peer (P2P) platform in Nigeria to comply with local regulatory guidelines. Presently, traders on Binance are limited to selling USDT at a cap of 1,802 naira per USDT.
The cryptocurrency exchange has assured Nigerian users of its commitment to collaborate with local authorities, lawmakers, and regulators to enforce compliance with the price caps. Binance P2P facilitates direct cryptocurrency transactions between users, allowing them to buy and sell cryptocurrencies for fiat currencies.
Under the imposed price cap, accounts of traders attempting to sell above the specified limit are automatically restricted, prompting some traders to seek unrestricted trading opportunities on alternative exchanges. Responding to criticisms suggesting compliance with Nigerian government exchange control objectives, Binance clarified that the P2P price peg resulted from an automatic system pause.
Binance explained that its systems automatically halt operations in response to significant currency fluctuations, emphasizing that the temporary price suppression is necessary to make adjustments ensuring continued trading. Nigeria's Office of the National Security Adviser, in collaboration with the Central Bank of Nigeria (CBN), has initiated joint efforts to combat foreign exchange speculation and address economic stability concerns.
These measures aim to curb the influence of speculators, whose activities, both domestically and internationally, have contributed to the devaluation of the naira, inflation, and economic instability in Nigeria. In mid-2023, the Nigerian government unified the foreign exchange window, resulting in a substantial depreciation of the naira against the U.S. dollar in the foreign exchange market. This saw the naira's value double from approximately 700 naira per 1 U.S. dollar to a historic high of over 1,500 naira per 1 U.S. dollar.
In July 2023, the Nigeria Securities and Exchange Commission (SEC) cautioned local investors against utilizing Binance, citing the platform's lack of licensing in the country and the illegality of its operations. The SEC also warned the public about the high investment risks associated with Binance and the potential for total loss. Despite regulatory challenges, Nigeria remains the world's largest P2P market for cryptocurrency trading. This status follows the Central Bank of Nigeria's 2021 ban on institutions engaging in cryptocurrency transactions. However, a subsequent notification to banks in December 2023 lifted the ban, allowing Nigerian banks to facilitate cryptocurrency transactions. Many Nigerians prefer P2P transfers for foreign exchange trading due to lower fees compared to traditional banking and exchange bureau channels.
