Nigeria, Binance in talks to develop crypto-friendly economic zone

Binance, the world’s leading cryptocurrency exchange, has held talks with the Nigeria Export Processing Zones Authority (NEPZA) to create a virtual economic zone in West Africa. The partnership aims to build a crypto-friendly zone similar to the Dubai Virtual Free Zone, announced NEPZA on Twitter.

NEPZA has announced that it is holding talks with Binance and technology infrastructure company Talent City to discuss the first virtual free zone. The zone aims to facilitate a business area that takes advantage of the benefits offered by a blockchain-powered virtual economy.

“We seek to break new grounds to expand economic opportunities for our citizens in line with the mandate of the Authority, the directive of the Honorable Minister and the economic development agenda of President Muhammadu Buhari. Our aim is to create a thriving virtual free zone to benefit from a nearly trillion dollar virtual economy in blockchain and digital economy,” NEPZA MD Adesugba so.

Outlook for Binance’s Nigerian interests

Nigeria was one of the first countries in Africa and the world to adopt cryptocurrencies. A recent study by Triple A, a cryptocurrency payment gateway app, revealed that the country has one of the highest rates of cryptocurrency adoption. Currently, it has over 22 million crypto users (10.34% of the total population).

According to a Statista report, Nigeria leads the world in cryptocurrency adoption. The Statista Global Consumer Survey (2019-21) revealed that among all respondents in the country, 28% of Nigerians owned or used cryptocurrency in 2019, 32% of Nigerians owned or used cryptocurrency in 2020, and 42% of Nigerians owned or used cryptocurrency 2. .

Since its launch, Binance has sought to work with many national governments to expand its business.

In May 2022, it signed an MoU with the authorities of Kazakhstan to develop a virtual asset market in the country.

“We truly believe that Kazakhstan can become a regional hub for international players in the crypto world,” said Bagdat Musin, Minister of Digital Development, Innovation and Space Industry.

But, the journey has been quite bumpy. Over the years, Binance has been criticized by several countries around the world for its unwillingness to protect its customers’ interests, prevent money laundering and operate without authorization.

In June last year, the stock exchange was warned by the Financial Conduct Authority (FCA) in Great Britain for having exposed consumers to risk through its “complex and high-risk financial products”.

In France, the exchange was recognized as a fully regulated provider of digital asset services in May this year. It was granted the same status in Italy the same month. In Spain, local subsidiary Moon Tech Spain was recognized as a virtual asset service provider during the same period.

In June, the US SEC launched an investigation into Binance to determine whether the company’s initial coin offering (ICO) of BNB tokens in 2017 constituted an illegal sale of a security. Zhao was quick to refute the claims, saying: “BNB is not a security.”

Claims of non-compliance

A January 2022 report by Reuters claimed that while Binance claimed to welcome public oversight, it withheld information from regulatory bodies, and did not keep track of its customers. The report concluded that Binance has operated outside the rules governing traditional financial firms and many crypto rivals, with minimal background checks.

Reuters also found that Binance continued to register customers in seven countries, including Russia and Ukraine, that were assessed to be at risk of money laundering, acting against the recommendations of its own compliance department.

In Germany, several Binance customers were defrauded after losing millions of euros to money laundering. German authorities, representing over 30 suspected victims, approached the company, but the company replied that it could not help.

A June 2022 Reuters report said that Binance served as a conduit for laundering at least $2.35 billion in illicit money during 2017-21.

Building a crypto-friendly system amid growing opposition

The cryptocurrency crash of May 2022 didn’t give Binance any respite either. The disaster gave regulators around the world an opportunity to push for more regulation in the cryptocurrency market, and in many countries like India, central banks continue to push for an outright ban on the asset class.

It therefore remains to be seen how the world’s largest crypto exchange collaborates with authorities to create a crypto-friendly financial system and at what cost.