World’s largest cryptocurrency exchange platform, Binance, has temporarily suspended deposits in Nigerian naira.
The suspension is in response to an order sent by the Central Bank of Nigeria (CBN). The order instructs local banks to identify, and close every accounts tied to cryptocurrency platforms or operations.
In the letter sent by the apex bank, the Nigerian government told local banks that dealing in cryptocurrency is prohibited under a 2017 circular stating Bitcoin (BTC) and other cryptocurrencies are not legal tender in the country.
While the directive is widely expected to affect fiat exchange, experts are of the opinion that quite a number of traders would not be affected by the directive, because most of the cryptocurrency trading in the country, occurs on peer-to-peer platforms.
In a statement, Binance announced that its Naira payment partners have suspended deposit services until further notice. The suspension of deposit, according to the statement, started from 7 p.m. on Friday.
Binance further added that it is monitoring the situation closely.
“Withdrawal services remain normal and will continue to be processed but might take slightly longer time than usual,” the statement said.
Reactions have trailed the directive by CBN, with many social media users believing that the directive by CBN is the government’s response to the #EndSars protest, which held all over the country last year.
The protesters, after their bank accounts were reportedly shut down by the government, are widely believer to have raised funds using Bitcoin.
Social media user have, since the directive by the apex bank, started an online campaign against the new development. The hashtag #WeWantOurCryptoBack is used to push the campaign.
Professionals in the cryptocurrency industry however, do not believe the panic will last, or that it will have any impact on cryptocurrency adoption.
According to a report by Coindeck, software engineer, Tosin Olugbenga, said the central bank may have issued the directive because of the Bitcoin price run of 2020, and the growing interest in cryptocurrencies worldwide, which is causing Nigerians to convert their earnings to cryptocurrency.
“They’re moving money from naira to crypto. That is what the CBN sees and has taken issue with. It is not banning crypto trading. It’s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance,” Tosin Olugbenga said.
Tosin Olugbenga further said that most cryptocurrency transactions in Nigeria happen on peer-to-peer level. He added that once the panic dies down, trading will continue as usual.