Nigeria’s Central Bank Approves cNGN Stablecoin Pilot in Regulatory Sandbox
In Brief
Central Bank of Nigeria approved African Stablecoin Consortium (ASC) to test the cNGN Stablecoin within its regulatory sandbox.
African Stablecoin Consortium (ASC) has been granted approval by the Central Bank of Nigeria (CBN) to test the cNGN stablecoin within its regulatory sandbox. The new stablecoin aims to transform the basic monetary unit of Nigeria, the naira, into a dynamic instrument for global remittances, commerce, trade and investment.
cNGN stablecoin is set to go live on February 27, 2024. The stablecoin is backed by naira reserves maintained by designated commercial banks at a 1:1 ratio.
ASC announced that the new cNGN stablecoin aligns with the regulatory requirements and standards established by the CBN, the Nigerian Securities and Exchange Commission, and the Nigerian Financial Intelligence Unit. ASC is working closely with the regulators to ensure adherence to compliance, consumer protection, and transparency.
The new stablecoin will help in facilitating the transfer of funds from Nigerians abroad to their families in Nigeria, removing the need for extended remittance processing times. Additionally, the cNGN seeks to eliminate the costly fees associated with traditional international transactions.
According to the CBN, the cNGN stablecoin is positioned to complement eNaira–the central bank digital currency (CBDC) issued by the Nigerian central bank. However, unlike cNGN, eNaira is designed with broader capabilities. Additionally, the oversight of cNGN completely falls under ASC.
The stablecoin is presently interoperable with strategic blockchains such as Bantu and BNB Smart Chain, with intentions to expand compatibility to all major blockchain networks in the near future.
Nigeria Embraces Cryptocurrency and Blockchain Technologies
Cryptocurrency regulations in Nigeria have been a subject of evolving importance in recent years. Chainanalysis analysts include Nigeria among the leading countries exhibiting a high Global Crypto Adoption Index, particularly in peer-to-peer (P2P) trading.
The growing acceptance of digital assets prompted Nigerian market regulators in May 2022 to release a set of regulations for digital assets, indicating the country’s attempt to strike a balance between an outright ban on digital assets and acknowledging their potential uses.
Unlike in previous years, CBN now also expects the local financial system to endorse and enable blockchain technology.
Recently, the bank acknowledged the escalating global demand for and adoption of cryptocurrencies and removed restrictions on Nigerian banks facilitating cryptocurrency transactions.
The approval of the cNGN stablecoin, backed by regulatory compliance and aimed at global utility, reflects a strategic move towards enhancing financial inclusion and transparency, signalling Nigeria’s progressive stance on blockchain technology and the evolving landscape of cryptocurrencies.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
