World’s Largest Cryptocurrency Exchange Takes Measures to Safeguard Users Amid Currency Manipulations
Binance, the leading global cryptocurrency exchange, has imposed limitations on peer-to-peer transactions involving the USDT/NGN pair as the Nigerian naira experienced significant depreciation on Tuesday afternoon. The exchange, renowned for facilitating transactions between fiat and digital currencies, particularly USDT, a stablecoin linked to the US dollar, asserts that these measures are necessary to shield users from potential fraudulent activities and market manipulation.
In response to the currency volatility, Binance has restricted certain functionalities for its Nigerian clientele. Notably, users are unable to execute ‘sell’ orders for USDT on the platform, and the ‘buy’ option is constrained to a maximum price of ₦1802.
This is not the first time Binance has intervened in the USDT/NGN trading pair. Similar actions were undertaken in December, coinciding with a notable ₦300 appreciation of the naira against the dollar within a single trading day. The exchange emphasizes its commitment to regulatory compliance and collaboration with local authorities to maintain market integrity, as articulated in a recent blog post.
Nigerians have increasingly turned to platforms like Binance to hedge against inflation and currency devaluation, with the exchange playing a pivotal role in price discovery amid Nigeria’s dual-market exchange rate system. However, concerns have emerged regarding potential market manipulation by speculators on the platform, prompting scrutiny and action from regulatory bodies.
In light of the restrictions imposed by Binance, traders are exploring alternative peer-to-peer platforms for stablecoin transactions. Several traders have reported migrating to competitors like Kucoin, where the naira was trading as low as ₦2000 against 1 USDT on Tuesday.
Despite the shift in trading platforms, some traders believe that the volume of USDT transactions is insufficient to exert significant influence on prices. They express optimism that with appropriate measures in place, attention can be directed towards addressing broader economic challenges and enhancing foreign currency inflows.
The Central Bank of Nigeria (CBN) has implemented various policies since June 2023 to alleviate currency speculation and facilitate efficient price discovery. Nevertheless, liquidity constraints and communication gaps persist, undermining confidence in the apex bank’s ability to stabilize the currency. This week, the Debt Management Office (DMO) raised bond yields by up to 3% in response to excess naira liquidity, signaling ongoing efforts to attract foreign investment and restore stability to the Nigerian economy.
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