The Nigerian Central Bank’s ban on cryptocurrency transactions, imposed in 2021 over money laundering and terrorism financing concerns, has now been lifted, paving way for renewed crypto activities in Nigeria.
The Central Bank of Nigeria (CBN) is not merely lifting restrictions, but is also actively engaging with the crypto space. Embracing the technology while addressing regulatory concerns, the CBN has introduced new measures, with the most notable being the development of a stablecoin pegged to the Nigerian Naira.
The stablecoin, named cNGN, is set to launch later in January and is designed to mirror the value of the fiat currency. For every 1 cNGN, there will be an equivalent value of 1 Naira. This move aligns with the global trend of stablecoins, such as Tether (USDT) and the USD Coin (USDC), which are pegged to major fiat currencies to maintain a stable value.
To further regulate and monitor crypto transactions, the CBN is introducing stricter Know Your Customer (KYC) rules. Stakeholders see this to be a positive step, believing it will enhance transparency and security in the crypto space.
Several key players in the Nigerian financial sector, including First Bank, Access Bank, Sterling Bank, and Providus Bank, have been tasked with developing the cNGN stablecoin. This collaborative effort aims to facilitate cross-border transactions and provide a regulated avenue for digital currency use.
However, the success of the cNGN stablecoin remains uncertain, especially following challenges faced by the eNaira, Nigeria’s previous attempt at a central bank digital currency (CBDC). Launched in October 2021, the eNaira was intended to be an alternative to the Naira but encountered low adoption rates and various obstacles.
As the crypto landscape in Nigeria undergoes significant changes, industry participants and the public will closely watch the developments surrounding the cNGN stablecoin, anticipating its impact on the country’s financial ecosystem.
