Despite the naira’s struggles and Nigerians exploring other currency options, the Nigerian government refuses to acknowledge its role in the issue. Instead, it has pointed a finger at Binance as the cause of the naira’s decline and arrested two of its employees.
In terms of the naira’s worth, it’s past due for the Nigerian administration to assume responsibility for decades of mishandling the currency. A more effective approach would be for the Nigerian government to embrace competitive currency markets instead.
For several years, the value of the naira has been declining. However, tensions reached a boiling point in February when the naira experienced another significant drop. During this time, Bayo Onanuga, an adviser to President Bola Tinubu on information and strategy, criticized Nigerian citizens for exchanging the naira for cryptocurrencies. He argued that if cryptocurrency use was not prohibited in Nigeria, the naira’s depreciation would persist.
Authorities allegedly claimed that Binance illegally transferred $26 billion offshore without approval, prompting an invitation for Binance representatives to attend discussions. Binance dispatched two employees, Tigran Gambaryan and Nadeem Anjarwalla, in response. However, Nigerian authorities detained them at their residences. Anjarwalla managed to leave the country, but Gambaryan, a US citizen and ex-IRS agent, remains in custody. They are presently charged with tax evasion, money laundering, and operating without a financial license.
It’s unfortunate that the actions of Nigerian government officials reflect a widespread trend among international authorities. Instead of generating income that attracts individuals, many governments opt for imposing limitations, confining people with their own funds unwillingly.
In simpler terms, Nobel laureate F.A. Hayek argued in 1976 that the benefit of having multiple currencies is that it puts pressure on current monetary and financial institutions. This pressure makes it impossible for any one institution to issue a less reliable or useful currency than the others, ensuring accountability and effectiveness.
It’s no wonder Nigerians have sought out cryptocurrencies, especially stablecoins, for holding value in dollars. With the Nigerian currency proving unstable, citizens have looked elsewhere for a more dependable means of preserving their wealth.
Through imposing limitations on cryptocurrencies as alternatives, the Nigerian government is only worsening their initial errors. They refuse to acknowledge that the usage of cryptocurrencies is merely a consequence, not the root cause, of the naira’s instability. Essentially, the government is inflicting harm on its own people by keeping them confined in a deteriorating situation.
From an international standpoint, the situation regarding Nigeria’s government actions towards cryptocurrencies remains uncertain. Over the past few years, the Nigerian authorities have introduced a central bank digital currency (CBDC), leading to cash scarcity; prohibited and then permitted the use of cryptocurrencies; restricted access to exchanges; detained foreign nationals; and are now pondering another potential ban on cryptocurrencies.
It’s probable that various businesses such as cryptocurrency creators, trading exchanges, and traditional financial entities may grow wary of dealing with Nigeria due to certain circumstances. Consequently, this reluctance to invest could negatively impact Nigerian citizens once more, forcing them to bear the brunt of the government’s error.
The Nigerian government desperately needs the discipline competition can provide.
The responsibility for mishandling the naira rests with the government, and they should allow the market to determine the currency’s value instead of interfering with price controls. The economic chaos caused by these inconsistent policies is largely to blame for Binance being accused of manipulating the naira’s exchange rate during its recent crash. However, it’s important to note that the allegation against Binance would likely have been less severe if not for the government’s heavy-handed involvement in setting exchange rates.
Instead of pushing forward with the Central Bank Digital Currency (CBDC), the Nigerian administration might consider focusing more on improving the naira. It seems that considerable resources have been invested in collaborating with contractors for the construction, maintenance, and reconstruction of the CBDC. However, these resources could potentially be used more productively to address issues with the national currency. The adoption rate of the CBDC has only surpassed 1% after a government-instigated cash scarcity.
In 1976, Hayek noted that once we abandon the common belief that a country should be in charge of issuing its unique currency, intriguing questions emerge which have yet to be explored. Nigerians, through their adoption of cryptocurrency, have already grasped this concept. The government now faces the decision of whether to join them.
The government has the option of persisting with decades-long mishandling of currency matters. On the other hand, they could encourage competition and strive to develop a desirable commodity for all citizens.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.
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2024-04-11 20:11