Table of Contents
TL;DR,
- Authorities blocked exchanges to protect naira stability as the currency hit 1,900 per dollar, yet data shows Nigeria ranks second globally in crypto adoption, suggesting bans may be ineffective against market forces.
- Government officials allege $26 billion in untraceable flows passed through Binance, prompting a severe crackdown to stop currency manipulation and prevent further capital flight from the country.
- Experts argue that blocking websites is a temporary fix that drives trading underground to riskier channels without addressing the root causes of devaluation, such as inflation and low oil production.
In late February 2024, millions of Nigerians woke up to find that they could no longer get to Binance, Coinbase, Kraken, and other big cryptocurrency platforms without a VPN. The Nigerian Communications Commission (NCC), backed by the Central Bank of Nigeria (CBN) and the Presidency, had ordered telecom providers to block these sites. The official reason:
Protect the naira’s stability from manipulation and restore financial stability as the currency plunged to historic lows of approximately 1,900 naira per US dollar.
Nigeria blocks crypto exchanges two months after being pro-crypto.
The act is sudden, without warning, as Binance users find themselves locked out. Binance suspended all peer-to-peer (P2P) naira trading as the currency hit record lows. The next day, Nigeria blocks crypto exchanges through a telecom directive targeting Binance, Coinbase, OKX, Kraken, Luno, and Bybit. By February 22, users on MTN and Glo networks reported they couldn’t reach these platforms without VPNs.
On February 27, CBN Governor Olayemi Cardoso raised the stakes considerably. Speaking at a Monetary Policy Committee meeting, he alleged that, “In the case of Binance, in the last year alone, $26 billion has passed through Binance Nigeria from sources and users whom we cannot adequately identify.”
He characterized the matter as evidence of “illicit flows” and announced a “zero tolerance policy for non-compliance with CBN regulations.”
Two Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, later found themselves behind Nigerian bars on February 28 over money laundering and tax evasion allegations. By March 5, Binance announced its complete exit from Nigeria’s financial ecosystem, delisting all naira trading pairs.
The surge threatened the naira’s stability; hence, the government’s position was unambiguous. Bayo Onanuga, President Bola Tinubu’s Special Adviser on Information and Strategy, publicly called for the banning of Binance and other similar sites, saying they were “setting the exchange rate for Nigeria” and “hijacking the role of the CBN.”
Why the Government Acted: Exchange Rate Control and Security Concerns
To understand the Nigeria crypto ban, you need to understand the economic reasons why the area relies too much on crypto. The currency fell from about 460 to over 1,500 naira per dollar on official markets between June 2023, when the CBN removed the dollar peg and floated the naira, and February 2024. Parallel rates reached 1,900. That’s a 200% depreciation, and keep in mind Nigeria is among Africa’s “golden” regions.
Nigerian leaders said they had three main worries:
Manipulating the exchange rate: P2P platforms like Binance’s marketplace became the main way to find out the price of the naira. A lot of Nigerians looked at Binance rates to find out what the “real” exchange rate was. The government thought this was a parallel pricing system that undermined the CBN’s authority.
Money laundering and funding terrorism: The CBN and the National Security Adviser’s office were worried about big, untraceable flows of cryptocurrency. The $26 billion figure from Governor Cardoso, which is difficult to verify on its own, showed that officials were worried about the size of transactions that were happening outside of regulatory view.
Preventing capital flight: As inflation lowered buying power and the naira fell, more and more Nigerians used crypto platforms to move their money into stablecoins or Bitcoin that were pegged to the dollar. To the users, this is hedging against inflation; from the government’s perspective, it’s accelerating the currency’s decline.
The Reality Behind the Nigeria Crypto Ban: Does Blocking Crypto Actually Work?
The effectiveness of foreign exchange control measures through crypto blocking is highly questionable, according to most independent analysts. They literally banned crypto back in 2022 and still remained Africa’s largest ecosystem.
Senator Ihenyen, lead partner at Infusion Lawyers in Lagos, has argued that the CBN’s shift toward regulation (the December 2023 guidelines) was a unique tangent.
“Especially when you are the number one country for crypto adoption in Africa and a leading market in the globe, the last thing you want to do as a regulator is drive adoption underground,” Ihenyen noted.
“Underground crypto adoption only puts regulators in the dark… It is always safer to regulate—resistance is futile.”
The data backs this claim, with Nigeria ranking second, globally, in grassroots crypto adoption in 2023, according to Chainalysis. Approximately 33.4% of the adult population engaged in trading or using digital assets. The country processed $56.7 billion in crypto transactions from July 2022 to June 2023, a 9% year-over-year increase. A KuCoin study found that 35% of Nigerians aged 18 to 60 were actively investing in cryptocurrencies.
High inflation, foreign exchange shortages, and limited access to traditional financial services pushed millions toward crypto as a practical tool for remittances, freelance payments, and wealth preservation.
Rume Ophi, a crypto and blockchain analyst in Lagos, pointed out the enforcement paradox:
“The government’s approach of blocking websites is a ‘lazy’ one that will not solve the problem… People will find a way to bypass the blockade through VPNs.”
Indeed, the block didn’t stop crypto trading, it simply pushed users toward alternative crypto trading channels. Bybit, KuCoin, or informal networks on Telegram and WhatsApp are still viable options despite having higher fraud risk.
What This Means for Naira Stability and Crypto Users
So will blocking exchange actually aid the naira stability initiative? The answer is a resounding no.
The underlying drivers of currency devaluations are low oil production, high import dependency, insufficient foreign exchange reserves, and persistent inflation.
The critical question: Did blocking exchanges actually stabilize the naira?
Moses Ojo, lead analyst at Pan-African Bourse, stated:
“The government is just looking for a scapegoat… The clampdown will not solve the problem of the naira’s volatility. It will only create more uncertainty and panic in the market.”
All it has done, especially for its crypto users, is to limit the number of “surface” exchanges. The result will simply be a massive shift towards private channels and DEXs, where scammers often reside. Freelancers and startups who rely on USD-pegged stablecoins and crypto for cross-border transactions will also be forced to seek alternatives.
However, what’s more intriguing is the mixed regulatory signals its government has. In December 2023, the CBN explicitly stated that “current trends globally have shown that there is a need to regulate the activities of virtual asset service providers” and issued detailed account-opening guidelines for VASPs.
Two months later, the same central bank supported blocking access to those very platforms. The “naira stability” campaign only goes so far.
Obinna Iwuno, president of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), captured the inconsistency:
“It’s affecting operators who are trying to comply. Some platforms are available on Airtel but not MTN, others on Glo but not 9mobile. It’s inconsistent and hurts legitimate exchanges.”
What Users and Businesses Should Know
If you want to get around Nigeria’s crypto scene, here’s what you need to know:
For users: Access to major international platforms is still not reliable across networks. VPNs are functional, yet their use can be challenging and potentially hazardous if you utilize unreliable services. Local exchanges that got temporary licenses from the SEC’s regulatory sandbox, like Quidax and Busha, have had their domains blocked, but they are still in business with new domains.
For businesses, the rules and regulations are still unclear. The SEC has laid out licensing frameworks that require a lot of money (500 million naira, or about $362,500 as of February 2024). These aspects could give bigger foreign companies an advantage over local startups.
For investors, Nigeria’s mixed signals present both risks and chances. The demand for crypto services is still strong because of remittances, inflation hedging, and the need for financial inclusion. But the fact that policies are difficult to predict is a big problem.
Regulation: Yes, Resistance: No
The government thinks that unregulated P2P venues make FX less stable and allow illegal finance. To “reassert monetary sovereignty,” they need to block access.
The industry says that Nigeria crypto ban does don’t fix the reasons for devaluation and instead push activity underground.
The evidence from Nigeria and similar cases (Zimbabwe, Argentina) indicates that complete blocking is ineffective. Because so many people are using it, the best way to keep the naira stable is to fix the supply of foreign exchange, inflation, and enforcement consistency, while also moving crypto activity into regulated channels.
