Nigeria comes for crypto exchanges. Nigerian government authorities recently restricted trading activity on large crypto exchanges. This clampdown is intended to curb an alleged manipulation of foreign exchange rates by these platforms. This comes amid an ongoing currency crisis that has seen the Naira depreciate by as much as 70% of its value against the dollar since the start of 2023. In the past week: - The Governor of the Central Bank of Nigeria (CBN) noted that about $26 billion in untraceable funds have been traded on Binance, alluding to suspicion of illicit activity and an ongoing investigation of Binance.
- Prominent exchanges like Binance and Luno suspended trading of the Naira with stablecoins like USDC and USDT.
- The Nigerian Communications Commission (NCC) reportedly directed telcos to block access to some of these exchanges, including Binance.
- Binance, in particular, has been greatly affected by these measures. In addition to pausing Naira transactions and blocking access to their Nigerian website, Binance executives were also allegedly detained by government authorities.
These events mark a stunning reversal in attitudes towards crypto from the CBN and the Nigerian government. As reported in Issue 186, the CBN had reversed its prior ban on financial institutions working with crypto companies, released new guidelines, and seemed set on collaborating with the SEC to issue licenses and monitor crypto-related transactions. Ultimately, this feels like a big step back for an industry that has seen increasing utility as a channel for personal remittances and cross-border trade. Many cryptocurrency networks are functionally decentralized, so it’s hard to force activity to zero. That said, there was an opportunity to improve user experience and education while still keeping a keen eye on money flows. As it stands, it’s not clear what these measures mean for crypto companies that were pursuing licenses and permissions with the regulators. Until Nigeria wins its never-ending battle with ever-shifting arbiters of its exchange rates, these firms might have to wait. FT. Semafor. [Nigeria]
MTN partners with Mastercard for payment solutions across Africa. This follows Mastercard’s $200 million investment into MTN’s fintech subsidiary – MTN MoMo. The new partnership will see MTN MoMo customers in 13 African markets get access to prepaid virtual cards for international payments. MTN MoMo merchants will also be able to set up online storefronts and receive payments through contactless card and QR payment methods. The two firms had announced a similar partnership in 2021. The last few years have seen global card networks Visa and Mastercard invest or establish issuing partnerships with wallets and mobile money providers like MTN MoMo, M-Pesa, OrangeCash, and OPay. Historically, traditional banks were the primary channel to acquire African consumers and issue card products. Card brands simply had to enter into agreements with these banks to distribute cards that could be used on their payment networks. In recent years though, fintechs and mobile money providers have emerged to compete with the banks. These new players have built a closed-loop, wallet-based ecosystem of consumers and businesses that sometimes don’t even require cards for payments. There are more than 700 million mobile money wallets in Africa, while less than 500 million Africans own a bank account. As fintechs and wallets disrupt the banks, it becomes imperative for the card networks to shift their distribution strategy to mitigate any impact to their cards business. The card networks can hedge against this shift through direct investments into these faster-growing fintechs, but they can also offer solutions in areas where they have the advantage in terms of distribution (global merchant acceptance) or innovation (ecommerce and contactless payments). Mastercard. [Africa] |
