Nigeria's Government Blames Binance Amidst Crypto Adoption and Naira's Decline
Summary:
As the Nigerian currency, the naira, continues to struggle, citizens are leaning towards cryptocurrencies as an alternative. In response, the Nigerian government has shifted blame to Binance for the currency's decline and detained two of its employees. The government's approach, which includes inconsistent cryptocurrency regulations and a lack of accountability for its monetary policies, has resulted in public criticism and a threat to potential investments.
As Nigeria's native currency, the naira, continues to struggle, citizens are casting their eyes towards alternative options, an act that the Nigerian government attempts to curtail by shifting blame away from its monetary policies. Recent events saw the government pointing at Binance for the naira's woes and, in a dramatic move, two representatives from the company were detained. With the naira's value plummeting, it's high time the Nigerian government be held accountable for the mismanagement of their currency and embrace the competition brought about by other currencies.
Earlier this year, following yet another crash of the naira value, President Bola Tinubu's information and strategy adviser, Bayo Onanuga, accused Nigerians of being unpatriotic due to their penchant for trading their native currency for cryptocurrency. He even suggested a ban on cryptocurrency to halt the decline. Controversially, authorities then blamed Binance for the illegal extraction of $26 billion from the country, detaining two of its employees - Tigran Gambaryan and Nadeem Anjarwalla - who were sent to Nigeria to address the issues at hand. The pair now stand accused of tax evasion, money laundering, and providing financial services without a legal permit.
This response from Nigerian officials mirrors worldwide tendencies, as governments frequently seek to curb currencies in favour of retaining ones people would not usually opt for. The rampant inflation of the naira led to Nigerians seeking a more reliable source, landing upon cryptocurrencies, particularly stablecoins, to gain access to the dollar. However, with the government's imposed restrictions, they double down on their monetary misgivings, penning citizens into a failure trajectory instead of acknowledging the real cause of the naira's downfall.
In recent years, the Nigerian government's crypto-related actions have been turbulent at best. They launched their own central bank digital currency (CBDC), faced a cash shortage, oscillated between banning and unbanning cryptocurrency, restricted access to exchanges, detained foreign nationals, and are now reconsidering the ban on cryptocurrencies. This inconsistency threatens potential investments from crypto developers, exchange platforms, and traditional financial institutions, which would only lead to further burdens on Nigerian citizens.
The Nigerian government needs to reflect accountability and allow the market to freely dictate the naira's exchange rate. Misguided regulations from the government have only added disarray to the economy. Scrapping the CBDC could also spare resources for addressing the core issue of the naira itself.
Forty-five years ago, F.A. Hayek opined that there would be numerous compelling discussions should governments stop monopolizing the creation and control of currencies. Encouragingly, Nigerian people have shown their acceptance of this idea through their use of cryptocurrencies. It's now on the government to mirror their citizens' progressive attitudes, choose progress over years of currency missteps, and aim to deliver a monetary option that every citizen can confidently rely upon.
Nicholas Anthony is a guest author and policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives. He has multiple writings on the subject matter, including a focus on the Infrastructure Investment and Jobs Act’s impact on cryptocurrencies. This article should not be treated as legal or investment advice. The views and opinions expressed here are solely author’s and do not necessarily represent Cointelegraph's standpoint.
Published At
4/11/2024 7:54:52 PM
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