Nigeria debuts CBDC early, part of its plan to usurp Bitcoin and Binance

The official website for Nigeria’s central bank digital currency (CBDC) is live ahead of schedule, as the government hopes to usurp local popularity of Binance and other crypto exchanges.

Nigeria’s unveiling of eNaira.com propels the most populous country in Africa toward an imminent CBDC launch, due October 1.

It also comes on the heels of a country-wide ban on fiat onramps at centralized exchanges, especially Binance.

The CBDC, by far the largest within the continent, touts cheaper remittances, greater financial inclusion, and similar claims to other CBDCs.

In addition to the country’s central bank, two agencies — the Nigerian Federal Ministry of Communication and Digital Economy and the National Information Technology Development Agency — will oversee the eNaira.

They began working together last October.

Nigeria demands crypto, not CBDC

In February, the Central Bank of Nigeria (CBN) banned financial institutions from providing services to cryptocurrency exchanges and their users.

This hurt Binance and other crypto exchanges, forcing them to suspend deposits of Nigerian Naira.

Currently, Binance only offers Naira (NGN) deposits through Binance Peer-to-Peer, and encourages cash-to-Tether (USDT) purchases by default when searching for NGN pairings.

Binance explains users “cannot deposit Naira” due to a recent CBN circular. As a result, banks in Nigeria are currently not supported.

A backlash against the Nigerian central bank quickly followed.

Extreme demand for Bitcoin amid a falling Naira prompted the central bank’s action.

Bitcoin over falling Naira

Nigerian protestors were also using cryptocurrencies to fund political protests. The crackdown on financial services for crypto exchanges sparked more than 26,000 tweets with the hashtag #WeWantOurCryptoBack.

Nevertheless, cryptocurrencies remained stunningly popular in Nigeria, where a majority of the population lacks access to bank accounts. Most Nigerian commerce is peer-to-peer, in cash.

In spite of the ban, Nigeria consistently tops global rankings of crypto usage. Peer-to-peer exchanges like Paxful, Remitano, and LocalBitcoins have steadily grown in Nigeria for four years.

Binance, however, is considered the country’s — and the world’s — most popular centralized exchange.

In 2019, Nigeria received $23.8 billion in remittances, according to a Brookings Institute study. Many Nigerians would wield Binance to avoid high fees and red tape.

Many began storing some of their wealth in custodial Bitcoin or stablecoins. Critics say the eNaira will make some of Nigeria’s banks redundant and increase the central bank’s control over the economy.

They also expressed concern that the central bank will use eNaira to monitor transactions — censoring users who threaten its control over the financial system.

Today, Nigerians can download an eNaira wallet and connect to an existing bank account. They currently cannot send any funds from that app to Binance.

Central banks want CBDCs, but not El Salvador

Nigeria isn’t the only government to explore CBDCs.

It’s thought that 81 central banks around the world are considering issuing CBDCs. The US Federal Reserve is due to release a report on its own CBDC momentarily.

In China, it was business as usual for crypto traders despite tough new laws in May. That changed five days ago when the country declared all transactions involving unofficial digital money illegal.

Meanwhile, China has been testing its digital yuan in preparation for a February 2022 launch.

The Bahamas has already launched its digital US-pegged “Sand Dollar.”

El Salvador, on the other hand, recently made Bitcoin legal tender. According to its president Nayib Bukele, 2.1 million El Salvadorans have downloaded the government’s wallet app to date, around one-third of the population.