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So many events have transpired in the Nigerian financial landscape in the past week. We have witnessed the value of the country’s local currency sink lower than ever, some even likened the dive to a quest to discover oil. 
Apart from the unprecedented collapse of the Nigerian naira against the United States dollar, we have seen how the Nigerian authorities, in a bid to ‘save the naira’ went after Bureau de Change (BDC) operators. Also, the Central Bank of Nigeria (CBN), in conjunction with the Nigerian Communications Commission (NCC) reportedly directed Telcoms to restrict access to crypto websites.&nbsp; 
However, a development that has been making waves is the alleged connection between USDT trading on Binance and the fall of the Naira in Nigeria.&nbsp; 
Last Wednesday, the Special Adviser to the President on Information and Strategy, Bayo Onanuga urged the central bank and the Economic and Financial Crimes Commission (EFCC) to clamp down on platforms like Binance and other cryptocurrency companies for alleged manipulation of the foreign exchange market. 
In a <a href="https://x.com/aonanuga1956/status/1760304339988484297?s=46&amp;t=jqcaUeCNyLKSkEd-Vi7PKg" target="_blank">statement</a> issued on X (Twitter), Bayo said Binance blatantly sets exchange rates for Nigeria and hijacks the CBN’s role, adding that it is a platform that suffers access limitations from multiple jurisdictions, such as the US, Singapore, Canada, and the UK. According to him, crypto exchanges like Binance and Kucoin ought to be prohibited from Nigeria’s cyberspace. 
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Following that, the Central Bank of Nigeria, in conjunction with the Nigerian Communications Commission (NCC) directed all telecommunications companies in the country to restrict access to crypto companies’ websites and applications. 
Read here: 
<a href="https://technext24.com/2024/02/22/naira-authorities-ban-crypto-exchanges/">Naira free fall: Nigerian authorities finally ban access to crypto exchanges</a> 
According to <a href="https://www.premiumtimesng.com/business/670511-forex-crisis-nigerian-govt-blocks-binance-octafx-coinbase-others.html" target="_blank" rel="noopener">reports</a>, Nigerian authorities are making this move to avert what it sees as continuous manipulation of the FX market, as part of efforts to avert the free fall of the local currency. The authorities also alleged that speculators use the p2p marketplaces of these platforms to significantly weaken the naira. 
As widespread and as disturbing as this notion is, below is why USDT is and is not capable of influencing the rate of the dollar in Nigeria. 
<h4 id="usdt-trading-does-not-dictate-naira-price" class="wp-block-heading">USDT trading does not dictate naira price&nbsp;</h4> 
Binance, as a global cryptocurrency exchange and a virtual marketplace where digital assets buyers and sellers meet to exchange various cryptocurrencies, is a facilitator, not a market influencer. Binance does offer a Peer-to-Peer trading feature, allowing Nigerians to trade USDT and other digital assets directly. However, there is no proven connection between this feature and Naira’s decline. 
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USDT is a stablecoin pegged to the US dollar and is commonly traded on Binance P2P. While it’s a significant player, it’s crucial to understand the nature of stablecoins, which is to maintain a stable value, minimising the volatility that cryptocurrencies are known for.&nbsp; 
In other words, USDT as a stablecoin is designed to maintain a stable value. Its purpose is to provide a reliable and less volatile asset for traders. Now, accusing it of causing the Naira’s fall contradicts its very nature. 
Importantly, the Naira’s fall is a complex issue rooted in various economic factors, and blaming P2P trading alone oversimplifies the situation. The value of any currency, including the Naira, is influenced by local and global economic conditions. Domestic economic policies, inflation rates, and government fiscal decisions have and will continue to play pivotal roles in shaping the Naira’s trajectory. 
<a href="https://p2p.binance.com/en" target="_blank" rel="noopener">P2P</a> trading on Binance is a decentralised process where users set their prices. It doesn’t have a centralized force dictating currency values. Currency values are influenced by a myriad of factors, including market demand, technological advancements, and macroeconomic trends. Isolating Binance P2P trading as the cause oversimplifies the complexities. 
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It is also worthy of note that Binance operates within the regulatory frameworks of various countries. The company is unlikely to engage in activities that would deliberately destabilise a national currency. 
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 Crypto coins on Naira notes
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With that in view, the decisions and policies implemented by the Nigerian government (past and present) regarding fiscal matters, trade, and investment have a substantial impact on the Naira, not USDT trading on Binance p2p. 
<h4 id="lastly" class="wp-block-heading">Lastly&nbsp;</h4> 
In the grand scheme of things, blaming Binance, specifically <a href="https://coinmarketcap.com/currencies/tether/" target="_blank" rel="noopener">USDT</a> trading, for the Naira’s fall oversimplifies a complex economic scenario.&nbsp; 
Binance operates within a global market, and the rise of the dollar against the Naira is a multifaceted issue with roots deep in economic policies, global trends, and domestic decisions. 
As we navigate the cryptocurrency landscape, it is important to be mindful of the bigger economic picture and resist the temptation to point fingers at individual platforms.&nbsp;

Here is why USDT trading on Binance P2P is not the cause of the Naira free fall

Technext.ng

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