The Nigerian Securities and Exchange Commission (SEC) has issued a clear statement declaring that Binance Nigeria is not registered or regulated by the SEC. This pronouncement effectively renders the operations of Binance, the popular global cryptocurrency exchange, within Nigeria illegal.
In an official statement published on its website, the SEC specifically noted that Binance Nigeria Limited, a subsidiary of Binance, has been actively promoting its web and mobile-enabled platforms to the Nigerian public. However, the regulator firmly emphasized that such activities are in direct violation of Nigerian law.
This announcement by the SEC comes in the wake of recent developments involving Binance US, the United States subsidiary of the global exchange. The U.S. SEC has filed a lawsuit against Binance, alleging that the exchange is operating an illegal securities exchange.
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The move by the U.S. SEC is believed to have triggered global scrutiny on Binance operations.
Binance is one of many crypto exchanges with a huge consumer base in Nigeria. Although like other exchanges, it is not regulated. This is due to the government’s previous stance on digital assets.
In early 2021, the Central Bank of Nigeria (CBN) declared cryptocurrencies illegal, forbidding regulated financial institutions from engaging in any kind of transaction involving the digital asset. The development forced a shift to Peer-to-Peer (P2P) platforms, which provided the needed alternative to traders.
Major exchanges including Binance also began to offer P2P services.
But in its statement, the SEC strongly cautioned Nigerians to exercise prudence and refrain from engaging with unregistered and unregulated platforms, specifically mentioning Binance Nigeria as one such platform to avoid.
Many of the P2P operators in Nigeria are not registered because of the CBN’s stance on digital assets.
The SEC’s statement
“The attention of the Securities and Exchange Commission (the Commission) has been drawn to the website operated by Binance Nigeria Limited, soliciting the Nigerian public to trade crypto assets on its various web and mobile-enabled platforms.
“Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal. Any member of the investing public dealing with the entity is doing so at his/her own risk.
“As the regulator with the statutory mandate of investor protection, the Commission urges Nigerians to be wary of investing in crypto-assets, and crypto-asset-related financial products and services if the service provider/its platform is not registered or regulated by the Commission.
“Nigerian investors are hereby warned that investing in crypto-assets is extremely risky and may result in total loss of their investment.
“By this circular, Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever.
“The Commission shall provide updates on further regulatory actions concerning the activities of Binance Nigeria Limited, and other similar platforms and shall work with other regulators in Nigeria to provide further guidance on this matter.”
This statement by the SEC indicates that the Nigerian government is making a shift from its former stance on cryptocurrency. On Saturday, the Federal Inland Revenue Service (FIRS) published a public notice on the enactment of the Finance Act 2023. The Finance Act provides for a 10% tax on digital assets, including cryptocurrency.
Meanwhile for US, Binance.US has told its customers to withdraw their U.S. dollars, after its payment and banking partners “signaled an intent” to pause dollar fiat channels around June 13.
The news comes in the wake of an Securities and Exchange Commission crackdown on crypto trading giants Binance and Coinbase earlier in the week. Binance.US has said the SEC’s allegations are “unjustified” and that “we will continue to vigorously defend ourselves.” Crypto firms have lobbied U.S. lawmakers — unsuccessfully — to create industry-specific regulations; the Securities and Exchange Commission says existing securities rules apply to cryptocurrencies and crypto exchanges.
Binance and related entities moved about $70 billion through accounts at Silvergate Bank and Signature Bank from 2019 to 2023, according to a filing on Wednesday.
Some crypto exchanges are considering emphasizing their overseas operations — or exiting the U.S. entirely, The New York Times reports. (LinkedIn News)