How stablecoins became part of Nigeria’s central bank’s plan for payments

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The Central Bank of Nigeria (CBN) mentioned stablecoin(s) at least 68 times in its newly released Payments System Vision 2028 (PSV 2028). For a regulator that once wanted banks nowhere near cryptocurrency businesses, this is a remarkable shift.

A stablecoin is a digital currency pegged to a stable asset, such as a fiat currency, to minimise volatility, used for payments and settlements, especially in cross-border transactions

In February 2021, the CBN instructed banks and other financial institutions to close accounts associated with crypto transactions. At the time, the regulator argued that cryptocurrencies posed risks to financial stability, money laundering controls, and consumer protection.

Five years later, the same institution is proposing an enabling framework for stablecoins to become part of Nigeria’s regulated payments infrastructure.

Across emerging markets such as Nigeria, stablecoins already help move money across borders, facilitate trade, and provide access to dollar liquidity for businesses and individuals.

More than 65% of crypto inflows into Nigeria are now denominated in stablecoins, with Tether’s USDT and Circle’s USDC dominating activity, according to a new International Monetary Fund (IMF) report on Nigeria.

For the CBN, the new question it wants to answer is whether stablecoins can be regulated in a way that helps solve some of Nigeria’s most persistent payments and foreign exchange (FX) challenges.

As PSV 2028 attempts to shape its broader ambition to redesign how money moves into, out of, and across Nigeria, stablecoins have emerged as one of the tools the CBN believes could help achieve that objective.

Between July 2024 and June 2025, Nigeria received approximately $92.1 billion in crypto-asset value, with stablecoins driving growth. The country’s numbers are nearly triple that of the next country, South Africa, according to blockchain analytics firm Chainalysis.

In a June 9 report on Nigeria, the International Monetary Fund (IMF) said the country has become the largest destination for stablecoin inflows in Sub-Saharan Africa, accounting for roughly 60% of regional inflows between late 2019 and early 2025.

The rise in stablecoins’ attractiveness can be traced to elevated inflation and naira volatility between 2023 and 2024, according to the IMF.

For households, stablecoins could serve as a cheaper alternative for receiving remittances. Remittances are a crucial part of income for many households, and amount to about $21 billion annually in Nigeria.

For freelancers, stablecoins provide access to international payments. For businesses, they increasingly function as a mechanism for treasury management and cross-border settlement. In effect, stablecoins have emerged as an unofficial dollar rail operating alongside the traditional banking system.

To tap into this growing usage, Nigeria’s first regulated stablecoin, cNGN, pegged 1:1 to the naira, was launched by WrappedCBDC, a private company, in early 2025. About ₦2.3 billion cNGN held by around 4,805 wallets was in circulation as of June 12.

To further strengthen stablecoin use cases, the CBN is exploring the creation of a regulatory framework that would formally recognise fiat-collateralised stablecoins as a distinct category of digital monetary instrument.

“Develop regulations that recognise fully fiat-collateralised stablecoins as monetary instruments, with CBN licencing, 100% high-quality reserve requirements, daily attestations, monthly audits, and real-time regulatory visibility via smart-contract ‘regtech nodes,’” it said in the PSV.

Under the model being considered, stablecoins backed one-for-one by reserves in Naira or foreign currencies would function as tokenised representations of fiat currency operating on blockchain networks.

“When fully backed by fiat reserves, such tokens function as on-chain representations of sovereign currency and must therefore be subject to monetary oversight distinct from e-money or crypto-assets,” the CBN said in the PSV.

The regulator is examining whether stablecoins can serve as digital extensions of traditional money.

A dollar-backed stablecoin would represent a digital claim on dollars held in reserve, while a Naira-backed stablecoin would represent a digital claim on naira deposits held within the banking system.

The CBN’s proposal effectively creates a framework where regulated stablecoins could sit alongside existing payment instruments such as bank deposits, electronic money, card networks, and the eNaira.

“In this context, the Bank is also reviewing approaches for the oversight of entities that may seek to issue fiat-collateralised stablecoins intended for use within the Nigerian financial system,” the CBN said.

To achieve this, the CBN said it is pursuing targeted legislative amendments to provide clear statutory recognition of fiat-collateralised stablecoins as monetary instruments rather than securities.

It intends to collaborate with the Securities and Exchange Commission (SEC) and other key stakeholders to develop a unified policy position that affirms their classification as digital representations of sovereign currency for payments, settlement, and value transfer.

Map the operational mechanics behind the central bank’s transition from an outright ban to on-chain supervision.

The CBN instructs banks to close all accounts associated with crypto transactions, asserting risks to financial stability, money laundering controls, and consumer safety. Capital flows immediately move into unmonitored peer-to-peer networks.

The CBN increasingly sees stablecoins as a potential source of FX liquidity.

It states that beyond tokenised monetary instruments such as fiat-collateralised stablecoins, the domestic payment system itself can be leveraged as a supplementary source of FX liquidity.

“This can be achieved through targeted regulatory inclusion and transparent oversight mechanisms that integrate licensed non-bank participants into official FX channels,” it said.

Today, Nigeria earns most of its FX from oil, which is constantly under pressure due to low production capacity and global price fluctuation, and diaspora remittances. Gross FX reserves stood at $50.44 billion on June 10, according to the CBN.

Because foreign currency-backed stablecoin reserves sit outside Nigeria’s regulatory visibility, the dollars backing them are typically held by foreign custodians and largely operate outside the domestic financial system.

For Naira-denominated stablecoins, the regulator is considering requirements that 100% of reserves be held in cash, treasury bills, or other approved liquid instruments with licenced Nigerian custodians.