Naira maintains stability in crypto market as Nigerians digest Binance $4.3 billion settlement
The Naira maintained its stability in the crypto market despite the $4.3 billion settlement with U.S authorities as it traded within the N1120- N1150 bandwidth against the dollar on Binance.
The world’s largest crypto exchange by trading volume agreed to pay $4.3 billion to settle criminal charges that it had broken money-transmitting and sanctions laws, “one of the largest penalties” the U.S has gotten from a defendant.
Founder Changpeng “CZ” Zhao entered a guilty plea in Seattle to charges that he personally faced. In exchange, he agreed to give up his position and pay a fine of $50 million.
The CEO position will be assumed by Richard Teng, a former regulator in Abu Dhabi who subsequently led Binance’s regional markets.
In a court filing that was made public on Tuesday, Binance was charged with operating an unlicensed money-transmitting business, failing to maintain an appropriate anti-money laundering program, and breaking sanctions laws.
Binance was ordered by Nigeria’s Securities Exchange Commission to stop operating in Africa’s largest economy but that hasn’t deterred the country’s residents. Nigeria is Africa’s biggest cryptocurrency market in Africa where Binance dominates the peer-to-peer market.
In 2021, the CBN forbade its banks and other financial organizations from engaging in crypto trading or assisting with transactions.
The FG muddies the waters with ambiguous policy goals for the cryptocurrency sector. Former President Muhammadu Buhari signed the 2023 Finance Act into law, bringing significant changes to the country’s revenue drive
One of the most significant changes is the introduction of a 10% capital gains tax on profits made in the disposal of digital assets starting on May 1, 2023, even though many global cryptocurrency exchanges used by residents are not registered in the country.
Digital exchanges are physically kept out of the nation’s borders thanks to the country’s Security and Exchange Commission’s clarification that digital assets include crypto assets where security tokens.
However, that hasn’t dampened the interest in crypto assets in the world’s most populated black nation. Nigeria’s crypto transactions between July 2022 and June 2023, reached $56.7 billion.
Nigeria’s fondness for the crypto market has its roots in several important factors that have created an ideal environment, partly due to a combination of persistent economic issues such as a high rate of unemployment and bureaucratic processes in transferring funds via official channels.
The general trend of the Nigerian people using less conventional transaction formats can also be attributed to inflation and limited access to more traditional forms of financing.
Following the sharp declines in the value of the local currency this year, the interest in bitcoin and stablecoins cryptocurrency tokens whose value is tethered to a stable asset to guard against wild volatility rose in Nigeria, according to Chainalysis.
Since President Bola Tinubu implemented some of the most audacious reforms Nigeria has seen in years such as eliminating some exchange rate restrictions and eliminating a popular but expensive gasoline subsidy the demand for stablecoins, and Bitcoin has skyrocketed.
Stablecoins are based on a reference asset typically the U.S. dollar and are fairly stable, they are used extensively by many young residents to shield them from the naira’s devaluation. In Nigeria right now, the tether is the stablecoin that is traded the most.
The main advantages of such digital assets include reduced volatility, low transaction costs, and increased security.
