Despite the $4.3 billion settlement with US authorities, the Naira remained stable in the crypto market, trading between the N1120-N1150 against the dollar on Binance. Binance, the world’s largest cryptocurrency exchange by trading volume agreed to pay $4.3 billion to settle federal accusations that it violated money-transmitting and sanctions laws, resulting in “one of the largest penalties” the US has received from a defendant.
Changpeng “CZ” Zhao, the company’s founder, entered a guilty plea in Seattle to charges that he personally faced. In exchange, he agreed to resign from his post and pay a $50 million fine. Richard Teng, a former Abu Dhabi regulator who later managed Binance’s regional markets, will take over as CEO.
Binance was accused with operating an unauthorized money-transmitting business, failing to maintain a proper anti-money laundering program, and violating sanctions laws in a court file made public on Tuesday. Binance has been ordered by Nigeria’s Securities Exchange Commission to cease operations in Africa’s largest economy, but this has not discouraged locals.
Nigeria is Africa’s largest cryptocurrency market, with Binance dominating the peer-to-peer industry. The CBN prohibited its banks and other financial institutions from engaging in crypto trading or aiding with transactions in 2021. Former President Muhammadu Buhari signed the 2023 Finance Act into law, altering the country’s revenue strategy significantly.
One of the most notable changes is the imposition of a 10% capital gains tax on earnings derived from the sale of digital assets beginning May 1, 2023, despite the fact that many worldwide cryptocurrency exchanges utilized by locals are not registered in the country. Because the country’s Security and Exchange Commission clarified that digital assets include crypto assets where security tokens, digital exchanges are physically maintained outside the country’s boundaries.
However, interest in crypto assets has not waned in the world’s most populous black nation. Between July 2022 and June 2023, Nigeria’s crypto transactions totaled $56.7 billion. Nigeria’s affection for the crypto market stems from a number of fundamental characteristics that have combined to create a perfect atmosphere, partly as a result of a mix of ongoing economic concerns such as a high rate of unemployment and cumbersome processes in transferring cash through official channels.
Inflation and limited access to more traditional forms of funding can also be ascribed to the general tendency of Nigerians choosing less conventional transaction types. According to Chainalysis, following the dramatic drops in the value of the local currency this year, interest in bitcoin and stablecoins digital tokens whose value is connected to a stable asset to defend against extreme volatility has increased in Nigeria.
The demand for stablecoins and Bitcoin has risen since President Bola Tinubu implemented some of the most bold reforms Nigeria has seen in years, such as abolishing some exchange rate limits and eliminating a popular but costly gasoline subsidy.
Stablecoins are based on a reference asset, often the US dollar, and are rather stable; they are widely used by many young citizens to protect themselves against the naira’s depreciation. Tether is the most commonly traded stablecoin in Nigeria right now. The primary benefits of such digital assets are lower volatility, lower transaction costs, and better security.
