Binance Nigeria, CBN on collision course after $26 billion opaque transactions

 

Admin I Tuesday, Feb. 27, 2024

 

ABUJA, Nigeria – It appears the Central Bank of Nigeria, CBN is on collision course with Binance Nigeria, following discovery of not less than $26 billion opaque transactions that passed through the Bitcoin trading platform.

The CBN has not been able to trace  sources of funds and their destination.

Governor of Central Bank of Nigeria, CBN, Mr. Yemi Cardoso who spoke during the Monetary Policy Committee, MPC meeting in Abuja cast doubts on the transparency of transactions facilitated by Binance Nigeria.

He said Binance Nigeria  processed $26 billion  in the past four years,  but could not  adequately identify the sources and users of the funds.

According to him,  since assuming office as the CBN governor there has been a significant volume of transactions conducted through Binance Nigeria,  noting the  challenges associated with identifying the origin and destination of the funds.

“We are concerned that certain practices go on that indicate illicit flows, going through a number of these entities and suspicious flows and best in the case of Binance.

“In the last one year alone, 26 billion US dollars, have passed through Binance Nigeria, from sources and users we cannot adequately identify”, the CBN boss told reporters.

He said the apex bank has a responsibility to protect Nigerians hence it is collaborating with SEC, which he said is bearing fruit.
“Certain practices reveal that there are illicit flows on some platforms. $26 Billion passed through Binance over the last one year which can’t be traced. We are collaborating with the EFCC on this issue”, he said, adding that the apex bank is determined to do everything in its power to stop manipulation in the market.

“We will not accept it. We will do everything possible to make sure this stops”, he said.

Other highlights  are:

– MPR raised by 400 Basis Point from 18.75% – 22.75%
– CRR raised from 32.5% to 45%
– Liquidity Ratio retained at 30%
– Asymmetric window adjusted from +100/-300 basis point to +100/-700 basis point around the MPR.

On Fiscal Policy Vs Monetary Policy

– We intend to collaborate very strongly with the fiscal side so that elements out of control can be managed to rein in inflation.
– The Fiscal Side and the Monetary Side must work together.
– Our tax to GDP ratio of 7.1% is one of the lowest in the world. The recommendation for development is that it should be upwards of 30%

On FX Liquidity & Clearing Backlogs

– We have been able to attract liquidity into the system.
– Upto $2 billion came in because of the move to greater transparency.
– On Backlogs, the CBN commits to clear identified and genuine forward transactions that are pending. $400m was delivered today.
– CBN will continue to work to make the market more liquid.

Dealing with Infractions.

– There will be continued collaboration between the CBN and law enforcement agencies.
– The CBN is moving to a very aggressive regulatory environment.
– Tolerance for people not to abide by CBN regulations is 0%.
– People and institutions must abide and those who do not, will face the consequences.
– Very thorough work is being done to identify what will be done (in terms of dealing with infractions). – Those who commit infractions should be ready to face the consequences.

On the Exposure Draft on BDCs

– The aim is to bring sanity to a sector that has been abused.
– The BDC in its current form, no longer serve the interest it’s meant for.
– Over 6,000 BDCs currently operate in Nigeria.
– Reforms will cover
— Share Capital: N500m for operating in a State and N2 Billion to operating Nationally.
— Who can be owners. Not just anyone can own a BDC.
— The use of technology.
— Surveillance and Monitoring

On the CBN Circulars.

– A lot of thought went into each of the circulars.
– They were not knee jerk decisions. They were the result of several months of committee meetings, debates, testings and deliberations.
– The circulars started to be rolled out as the market developed.
– It is important that the CBN listens and where it needs to adjust, it will adjust.

On the Naira being Undervalued

– The Comment of the Naira being undervalued was based on
1. The Technical Side. The CBN has its own calculations and can say technically that the NGN is undervalued.
2. The Softer Side – This speaks to the distortion in the market. To the extent that the market is not functioning well, you cannot rely on the rates it is producing.

On Distortions

– Manipulations is a distortion.
– We are investigating some of the distortions.
– Some of these distortions are as a result of bad behaviour and we will make sure there are consequences for these actions.

On Interventions

– The CBN is moving away from interventions
– It takes a lot of time for what the CBN does not have the expertise for.
– Interventions (excluding ways and means) was in excess of N10 Trillion. Compare that to the budget of the FGN. Do the maths and you will see the damage.
– The times when we can have the luxury of failed interventions in Nigeria is over.