Nigerian capital market regulators should focus on building confidence in the Nigerian financial markets and the economy as the challenge Nigeria faces with regard to the currency is one of supply and demand, versus platforms used for exchange, including Binance.
This was disclosed by Nnamdi Nwizu, Co-Managing Partner & Head, Trading at Comercio Partners in a statement shared with Nairametrics reacting to calls by BDC operators to ban operations of Binance, reported by Nairametrics.
Nwizu cited the experience of AbokiFX, adding that banning does not necessarily solve the problem or help stabilize the currency.
Regulatory Stability
Nnamdi Nwizu noted that the Nigerian regulators should build confidence in the financial markets, citing that collaboration between regulatory bodies, financial institutions, and market participants, is essential to ensure a robust financial ecosystem, saying:
- “We have seen from the experience with Abokifx, that banning does not necessarily solve the problem or help stabilize the currency.
- “The challenge we have with regards the currency is one of supply and demand, versus platforms used for exchange.
- “As we navigate this complex landscape, collaboration between regulatory bodies, financial institutions, and market participants, it is essential to ensure a robust and sustainable financial ecosystem that serves the interests of our nation and its citizens.
- “The focus now for regulators should be about building confidence in the Nigerian financial markets and the economy.”
Binance operations
He noted that identifying Binance as a major factor impacting the pressure on the naira underscores the complex interplay between global cryptocurrency platforms and local currency stability, adding:
- “Binance’s substantial trading volume and liquidity, as highlighted by its 1.2 million transactions per second, indeed positions it as a formidable force in the global financial landscape.
- “However, the reliance on such a platform as a cornerstone for the Investor and Exporters window and parallel market raises valid concerns about the influence it wields over our economy.”
Domestic Resilience and Stability
Nwizu acknowledged Binance’s role as the most liquid market may offer certain advantages, adding that it also emphasizes the importance of fostering domestic financial resilience, adding:
- “The proposal to ban Binance urges us to explore ways to bolster local content and develop our own platforms that can effectively compete and provide alternatives.”
- “This aligns with the broader objective of reducing external dependencies and strengthening our financial autonomy.”
- “The question is, why do Nigerians use Binance as a platform for foreign exchange transactions?”
- “In this context, it is crucial to balance the need for stability and confidence in our foreign exchange market with the potential benefits and risks associated with a global platform like Binance.
What you should know
Nairametrics reported in June that Nigeria’s Securities and Exchange Commission (SEC) stated that Binance Nigeria, a subsidiary of global cryptocurrency exchange Binance, is operating illegally in Nigeria as it is not registered or regulated by the SEC.
The SEC also warned Nigerian investors about the risks associated with investing in crypto-assets and urged them to be cautious when dealing with unregistered and unregulated platforms like Binance Nigeria.
Last week, the Association of Bureaus De Change Operators of Nigeria (ABCON) called on the Federal Government to ban the operations of Binance in the country.
The President of ABCON, Alhaji Aminu Gwadebe, warned Binance trading is becoming the anchorage of the Investor and Exporters window and the parallel market, adding that the exchange is the most liquid market with 1.2 million transactions per second, he added:
- “If you know about Binance, you will know that Binance trading is becoming the anchorage of both the investors and exporters window and the parallel market, which is unfortunate.
- “So, we have to do something that can stop Binance. It’s a competition; we need to ban Binance and the only way to do so is if you have liquidity.”
- “As I speak, Binance is the most liquid market; they do 1.2 million transactions per second. So, it’s a very liquid market but that is not a scary status, we can break it through our local content and peculiarities.”
