Binance has introduced a price cap for Tether ( USDT) tokens on its peer-to-peer (P2P) platform in Nigeria in order to comply with local regulatory requirements.
Traders on Binance’s P2P platform are currently restricted from selling USDT above the set cap of 1,802 naira per USDT.
In a Tuesday blog post, the world’s largest crypto exchange said they are working closely with Nigerian authorities, which prompted the decision to implement the price cap.
“As industry leaders, we are working hand in hand with local authorities, lawmakers, and regulators to ensure we act on non-compliance,” the exchange wrote.
Binance’s P2P platform enables users to directly buy and sell cryptocurrencies for fiat currency with other users, providing a convenient trading avenue.
Binance Bans Users Trying to Sell USDT Above Limit
As a result of the price cap, accounts belonging to traders attempting to sell USDT above the imposed limit were blocked.
Consequently, some traders have sought alternative exchanges to freely trade USDT without such restrictions.
We will go to other exchange and trade
— Chival Enterprise (@ChivalEnterpri1) February 21, 2024
The move by Binance aligns with the joint efforts of Nigeria’s Office of the National Security Adviser and the Central Bank of Nigeria (CBN) to combat forex speculation and address issues affecting the country’s economic stability.
These efforts have been initiated in response to the significant role played by speculators, both domestic and international, in the depreciation of the Nigerian naira.
The devaluation of the currency has exacerbated inflation and led to economic instability within the country.
Nigeria’s Tense Relationship with Binance
It is worth noting that the Nigerian Securities and Exchange Commission (SEC) issued a warning to local investors in July 2023 against using Binance.
The regulatory agency stated that Binance lacked the necessary licensing to operate in the country, deeming its operations illegal.
The SEC also emphasized the high level of risk associated with cryptocurrency investments and the potential for total loss.
Nigeria currently holds the position as the largest P2P market globally, a status that emerged after the Central Bank of Nigeria banned institutions from conducting cryptocurrency transactions in 2021.
However, in December 2023, a circular was sent to banks lifting the ban, allowing Nigerian banks to facilitate cryptocurrency transactions.
Many Nigerians encounter difficulties when conducting foreign exchange transactions through traditional banking and Bureau de Change channels.
The higher fees associated with transferring foreign currency within the banking system compared to the crypto market have made P2P transfers more appealing to individuals seeking cost-effective alternatives.
As reported, a recent survey has revealed that Nigeria is the most crypto-savvy nation ahead of the United States and European countries.
Per the survey, Nigeria’s crypto awareness stands at 99% as the country leads in digital asset knowledge and perceived investment drive.
The data showed that 99% were fully aware of cryptocurrencies while 70% understood the value, operations, and fundamentals of blockchain technology.
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