In recent news, the world’s largest cryptocurrency exchange by trading volume, Binance, has been ordered to cease operations in Nigeria by the country’s Securities and Exchange Commission (SEC). In a statement, the regulator declared the operations of Binance as “illegal” in Nigeria, stating that the cryptocurrency exchange was not registered nor regulated by the commission. The Nigerian central bank previously banned banks and financial institutions from facilitating transactions in digital currencies in 2021.
Although the central bank’s ban exists, Nigeria still leads the largest volume of digital token transactions done on peer-to-peer trading platforms outside of the United States. With this backdrop, the Nigerian SEC warns investors that investing in crypto-assets is “extremely risky and may result in a total loss of investment.” The commission has ordered Binance to stop soliciting investments from Nigerians and threatened further regulatory action against the platform and other similar exchanges operating in the country.
Last year, Nigeria’s SEC published a set of regulations for digital assets, aiming for a middle ground between an outright ban on crypto-assets and their unregulated use. The regulator suggested permitting tokenized coin offerings on licensed digital exchanges backed by assets such as equity, debt, and property but not crypto.
Binance is also facing increasing regulatory scrutiny elsewhere. The US SEC recently launched lawsuits against Binance, accusing the firm of illegally operating a securities exchange. Charges include operating an unregistered exchange, offering unregistered securities to the general public, and failing to register as a broker. The SEC claims that Binance and its CEO evaded US laws by claiming that the Binance.US platform was run independently and that US customers could not use the Binance.com platform.
Despite escalating regulatory scrutiny, Binance has not experienced significant outflows. CZ, the CEO of Binance, stated in a tweet that the platform saw a net outflow of around $392 million over the past 24 hours. He mentioned that the exchange observed $7 billion in withdrawals in one day back in November, usually occurring more on sharp price movement days.
The case of Binance in Nigeria serves as a significant reminder for crypto enthusiasts of the potential risks and challenges tied to the ever-changing regulatory landscape. The increasing scrutiny puts pressure on both exchanges and investors to navigate these tumultuous waters carefully. As countries continue to fine-tune their regulations, the crypto market will need to adapt and find innovative ways to balance user demands while remaining compliant with regulatory requirements.
Source: Cryptonews
