Forex Crisis: Nigerian Government Restricts Access to Binance, Coinbase, Kraken, Other Crypto Platforms

Amid a currency crisis, the Nigerian government has blocked access to several cryptocurrency platforms, including Binance, Kraken, Coinbase, amongst others. This action comes as part of efforts to address the ongoing challenges with local currency (Naira).

Reports reveal that the Nigerian Communications Commission (NCC), the telecoms regulator, on Wednesday ordered telecoms companies to restrict consumer access to the websites of companies like Binance, Coinbase and Kraken, according to people familiar with the matter. On Thursday consumers had only intermittent access to some sites.

Following this recent restriction on crypto platforms, Nigerians are lamenting this new move from the government. Taking to the X (formerly Twitter), many have started complaining about the website of these platforms not going through.

Under President Bola Tinubu’s administration, mounting pressure has ensued as the naira plunges to historic lows against the US dollar, with inflation nearing 30%. These platform blocks follow a series of economic reforms, notably the unification of multiple exchange rates, which precipitated a rapid depreciation of the naira.

Due to this, crypto exchanges have become important conduits to establish unofficial market prices for the naira. The prices quoted on these platforms often serve as a benchmark for local foreign currency exchange rates. Local traders also use the exchange to trade between the naira and tether, the world’s largest stablecoin — the value of which is pegged to the US dollar.

To address the persistent decline of the Nigerian naira and curb speculative activities, the government has collaborated closely with the Central Bank of Nigeria to enact these measures, citing concerns about criminal activities exacerbating the nation’s economic instability.

Despite warnings regarding potential consequences, the government maintains that the benefits of averting speculative attacks on the naira outweigh any potential drawbacks. However, critics caution that such actions could lead to increased economic isolation and stifle innovation within the fintech sector.

Facing one of its most severe economic crises in years, Nigeria’s government prioritizes safeguarding the foreign exchange market and fostering macroeconomic stability. Additionally, the Central Bank of Nigeria has imposed stringent regulations on banks’ foreign exchange exposures to mitigate financial system risks. 

While these measures are intended to bolster the economy, they must be meticulously balanced to avoid inadvertently harming legitimate business operations and investor confidence.