Nigeria Has Pledged Its Support for the Digital Asset Sector Despite Its Purge of Offshore Exchanges in 2024 and the Ongoing $81.5 Billion Lawsuit Against Binance

Despite its purge of offshore exchanges in 2024 and the ongoing $81.5 billion lawsuit against Binance, Nigeria has pledged its support for the digital asset sector

Nigeria is planning to continue supporting the digital asset sector despite its recent purge of offshore exchanges and the $81.5 billion lawsuit against Binance.

The West African nation is the continent’s largest digital asset market and one of the world leaders in adoption. However, recent enforcement actions, which led to the shutdown of global exchanges like Coinbase (NASDAQ:COIN) and KuCoin, dampened the sector, leading to a drastic dip in stablecoin volume last year.

In February, the government also filed a lawsuit against Binance, demanding $79 billion for economic losses and $2 billion in back taxes, which would be the biggest fine in the sector.

Still, the government is committed to promoting the growth of the digital asset sector, says Information Minister Mohammed Idris.

In an interview with Semafor, Idris said the government is out to protect investors, “not to cripple anybody.” He added that no VASP will be allowed to operate in Nigeria without the proper licensing, whatever the company size.

Binance has since accused the government of overreach and demanding $150 million in bribes to release the exchange’s official Tigran Gambaryan, who was detained for eight months.

In an interview with Blockworks earlier this year, Binance CEO Richard Teng stated that the actions of the Nigerian government against the exchange “were not warranted.” He added that the exchange had tried to work with the government, but Nigeria was not interested in an amicable resolution.

However, as other officials have done previously, Minister Idris dismissed Binance’s claims as mere antics to strong-arm the government.

“There are other companies operating in the crypto sector in Nigeria, you don’t see them [facing charges],” Idris said.

The government has since implemented a new licensing framework for VASPs, issuing its first pair of licenses to local exchanges Busha and Quidax in 2024. Another batch of applications are being fast-tracked to be issued this year.

The country is also targeting a much bigger settlement. For context, the $81 billion the government is demanding is more than twice Nigeria’s 2024 budget. The total penalty could be bigger as Binance faces another court case for facilitating money laundering.

The report: 59% drop in cash usage

Despite the recent rocky phase with the country’s digital currency journey, Nigeria’s digital payments have skyrocketed in the past decade, a new report shows.

According to the report by Ohio-based fintech firm Worldpay, cash payments in the country dropped by 59% between 2014 and 2024, the largest drop among cash-reliant major economies.

The report, titled "Global Payments Report 2024," further projects that cash payments will drop another 32% by 2030. Worldpay analyzed 40 economies representing nearly 90% of global GDP.

"The report reveals a mixed picture for cash across the 40 economies, with some seeing a steeper decline than others," the report reads.

"The five economies with the largest decrease in cash share of total payments are Nigeria, Indonesia, the Philippines, Mexico and Vietnam."

The report adds that Nigeria’s digital payment revolution has been propelled by a combination of fintech innovations, mobile money adoption and enabling regulations.

"While still a cash-reliant society, smaller day-to-day payments are increasingly being made digitally, supported by the rapid development of fintech in recent years," the report said of the West African nation.

The country’s central bank launched the eNaira in 2021, making it the first in Africa and one of the first in the world. However, the initiative has since failed to gain the intended traction, leading to the rise of two new local stablecoins.