Nigeria Prepares to Introduce First Regulated Naira-Backed Stablecoin

Nigeria is on the verge of launching its first regulated stablecoin, cNGN, a collaborative effort involving a consortium of the nation’s banks, fintechs, and blockchain companies. This pioneering stablecoin, set to debut in 2024, will be pegged on a 1:1 basis with the Nigerian Naira (NGN) and will be recognized as legal tender, distinct from previous stablecoin models.

Unlike its predecessors, the cNGN will function as a cryptocurrency and not a central bank digital currency (CBDC). The stablecoin will be managed and owned by member banks of the consortium, bringing a new dimension to Nigeria’s financial landscape.

However, many details about the cNGN, such as the underlying blockchain technology and consumer-oriented applications and services, remain undisclosed, as noted by Forbes.

This development follows Nigeria’s recent policy shift, which allowed cryptocurrency transactions in the country, reversing a ban imposed in February 2021 by the Central Bank of Nigeria. This reversal acknowledges the increasing significance of cryptocurrencies in the global financial system and their inevitable integration into Nigeria’s economy.

Nigeria’s journey towards digitizing its currency has seen several initiatives, including the introduction of a cashless policy in 2012 and the launch of the eNaira CBDC in October 2021. Despite these efforts, the uptake of the eNaira has been limited, attracting only a fraction of the country’s population, many of whom still require access to bank accounts. The introduction of the cNGN stablecoin marks Nigeria’s continued commitment to modernizing its financial system and embracing digital currencies.