Key Takeaways
- Nigeria SEC argues that Binance is neither registered nor regulated by the agency, and its operations are “illegal” in the country.
- The development also comes shortly after the United States Securities and Exchange Commission filed a lawsuit against Binance.
Nigeria’s Securities and Exchange Commission (SEC) has officially declared Binance, the world’s largest cryptocurrency exchange, as operating illegally within the country. The SEC stated that Binance Nigeria Limited had neither registered nor been regulated by the commission and had actively encouraged Nigerian investors to trade crypto assets on its unregistered platforms.
Consequently, the SEC has imposed an immediate ban on Binance, prohibiting the exchange from soliciting Nigerian investors in any form. This development comes shortly after the United States Securities and Exchange Commission (SEC) filed a lawsuit against Binance.
On June 5, the US SEC brought forward 13 charges against the exchange, including accusations of unregistered securities offerings and sales, failure to register as an exchange or broker, and commingling of funds. Binance has maintained that it has provided all the necessary information to regulators and is prepared to defend itself in court.
Binance has gained significant popularity in Nigeria, emerging as a leading cryptocurrency platform in the country. It was even in discussions with the Nigerian Export Processing Zones Authority (NEPZA) in 2022 to establish a virtual free zone centered around blockchain and the digital economy. However, the SEC’s declaration has abruptly halted Binance’s operations in Nigeria and cautioned Nigerians against engaging with the exchange, emphasizing the associated risks.
The ban on Binance coincides with recent regulatory developments within Nigeria’s crypto ecosystem. In May, the SEC announced plans to allow the tokenization of assets such as equities, property, and debt. Furthermore, the Nigerian government formally approved the use of blockchain technology. Nevertheless, the SEC’s statement clarified that Binance’s lack of registration and regulation in Nigeria makes its operations illegal.
It is worth noting that the Central Bank of Nigeria does not recognize cryptocurrencies as legal tender and commercial banks have been prohibited from conducting crypto transactions since February 2021. Despite these restrictions, Nigeria remains a significant player in terms of crypto adoption, accounting for the largest volume of crypto transactions through peer-to-peer trading platforms outside the United States.
The SEC’s warning to Nigerian investors about crypto assets and related financial products and services is based on the inherent risks associated with the crypto market. The recent implementation of a 10% capital gains tax on digital assets under the Finance Act 2023 by Nigeria further highlights the government’s efforts to regulate the sector.
