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.
Stablecoins are part of how Nigerians move money
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.
By allowing funds to move directly over blockchain networks, stablecoins can reduce reliance on intermediaries that typically charge transfer and foreign exchange fees, helping recipients receive more of the money sent to them.
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.
The CBN Regulatory Evolution Engine
Map the operational mechanics behind the central bank’s transition from an outright ban to on-chain supervision.
The 2021 Banking Restriction
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.
Structural Consequence
By detaching crypto assets from the formal financial loop, capital operations move underground into hidden peer-to-peer execution channels.
User
Hidden P2P
No Oversight
A new source of foreign exchange liquidity
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.
For foreign currency-backed stablecoins, including dollar-backed instruments, the central bank is evaluating rules that would require a minimum portion of reserves to be held domestically with approved commercial banks.
“A minimum percentage of total fiat reserves backing approved stablecoins denominated in foreign currencies (e.g. USD) should be held domestically in approved custodians (licensed commercial banks),” the CBN said. “The remainder may be held in approved foreign custodians/jurisdictions, including short-term sovereign instruments (e.g. US treasuries) to enhance stability and liquidity.”
This approach contrasts with Kenya, where the National Treasury has proposed that stablecoin issuers serving the public must maintain local fiat-backed reserves in high-quality liquid assets, including cash and deposits, held with commercial banks or the Central Bank of Kenya (CBK).
The CBN wants some of the underlying liquidity supporting stablecoins to become visible, regulated, and connected to the formal financial system.
In effect, the regulator is examining whether stablecoins can create an additional pool of regulated foreign currency liquidity that supports trade, remittances, and cross-border commerce.
Already, stablecoins are expected to play a more active role in cross-border payments, with the CBN intending to leverage them and central bank-backed digital currencies to navigate currency hurdles with its trading partners.
The IMF explained that stablecoins can enable near-instant cross-border transfers at low cost by reducing reliance on correspondent banking networks and multiple intermediaries that can make traditional cross-border payments slow and expensive.
According to the World Bank, the global average cost of sending $200 remains high at 6.49%, rising to 8.78% in Sub-Saharan Africa, while global payment giant Stripe reports that sending stablecoins typically entails fees of only a few cents per dollar, although total all-in costs depend on network conditions and on- and off-ramp fees.
The PSV 2028 Impact Engine
Model conservative cost reductions under the CBN’s proposed framework, accounting for actual fiat on/off-ramp friction.
SSA Remittance Avg. (8.78%)
Global Trade Avg. (6.49%)
Per-Transaction Cost Breakdown
3–5 Days • High friction
Near-Instant • ~50% drop
5.00% PSV 2028 ceiling goal
Infrastructure Shift: Inside the Framework
To prevent capital flight, rules require stablecoin issuers to hold a minimum threshold of foreign currency reserves domestically within licensed commercial banks instead of offshore.
Supervision moves from slow paper audits to programmatic oversight, embedding central bank smart-contract observer nodes into verified networks for real-time tracking.
- Central Bank of Nigeria Payments System Vision 2028 Blueprint.
- World Bank Remittance Prices Worldwide (Sub-Saharan Africa 8.78% & Global 6.49% benchmarks).
- Stablecoin metrics assume a conservative ~50% reduction from traditional rates to account for on/off-ramp exchange spread friction.
The winners
The CBN’s proposal could create significant opportunities across the payments ecosystem.
Businesses engaged in international trade stand to benefit from faster settlement times and potentially lower transaction costs. Importers could gain access to more efficient payment channels. Exporters could receive funds faster. Remittance providers could reduce costs.
It currently costs about $17.56 to send $200 to Nigeria, according to the World Bank. For a $2,000 payment, companies and individuals will have to part with $175.6. If stablecoins only cost about 50% of what is currently obtainable, the operating costs for businesses and individuals will also drop.
The CBN ultimately wants to drop the cost of remittances to 5%.
Treasury and cross-border payment startups would also gain regulatory clarity that allows them to scale new products. Already, several African fintech companies are exploring stablecoin-based payment infrastructure for businesses engaged in international commerce. Companies such as Grey, Paga, and Flutterwave are all showing interest in the space.
The banking sector could also emerge as a beneficiary.
If reserve custody requirements are implemented, commercial banks could become key custodians of stablecoin reserves, creating a new role within the emerging digital asset ecosystem.
Building a regulatory framework
To achieve its objectives, the CBN intends to introduce a classification framework that distinguishes stablecoins based on reserve structure, risk profile, and use case.
The framework recognises fiat-backed stablecoins, which are fully collateralised by naira or foreign currency reserves and are considered suitable for regulated remittances, trade facilitation, and tokenised deposits.
It also recognises asset-backed stablecoins, which derive value from commodities or securities and would require stricter transparency and valuation oversight.
The classification system would underpin licensing, reserve requirements, redemption obligations, interoperability standards, consumer protection measures, and disclosure rules.
The central bank said it is studying regulatory approaches in jurisdictions including Hong Kong, Japan, the European Union, and the United States as it develops its own licencing regime.
“Review existing regulatory guidelines to determine how fiat-collagenised stablecoin off-takers may be granted supervised access to relevant payment system functions, including settlement and on/off-ramp operations, in a manner consistent with oversight requirements,” the CBN said.
Under the proposed framework, stablecoin issuers would be subject to prudential, operational, technological, and disclosure requirements, and would be licenced by the CBN.
On March 31, the CBN launched a supervisory pilot for virtual asset service providers (VASPs) that included fintech firms Flutterwave and Paystack, crypto startup Koin Koin, and cNGN, a Naira-backed stablecoin issuer.
The regulator is considering daily reserve reconciliation, real-time reserve attestations, monthly audits, segregation of reserve assets, and mandatory redemption mechanisms.
Stablecoin issuers would also be required to comply with anti-money laundering and counter-terrorism financing rules, including transaction traceability and Travel Rule obligations.
The CBN wants visibility, not just regulation
PSV 2028 proposes the possibility of CBN observer nodes operating on approved blockchain networks.
The bank is also evaluating a regulatory technology (RegTech) node architecture that would provide real-time visibility into issuance, redemption, circulation, and reserve positions.
A RegTech is a technology solution that helps financial institutions comply with regulations efficiently and effectively, often through automation and real-time reporting.
“This architecture would give the CBN continuous, tamper-evident insight into stablecoin supply, reserve adequacy, and transaction flow; transforming compliance from periodic audits into real-time supervisory oversight consistent with international best practice in Hong Kong, the EU, and the BIS mBridge framework,” the bank said.
Unlike traditional supervision, which relies heavily on periodic reporting from regulated institutions, the proposed system would allow regulators to monitor activity directly through blockchain infrastructure.
The CBN wants stablecoins to operate in a manner that preserves the transparency and programmability of blockchain technology while maintaining regulatory visibility comparable to traditional financial systems.
That approach reflects a broader global trend among regulators who increasingly view blockchain infrastructure not as something to prohibit but as something to supervise more effectively.
In August 2025, Hong Kong introduced a stablecoin licensing regime requiring reserve backing and redemption rights. In the United States, lawmakers passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) ACT, which provides a framework for the federal regulation of payment stablecoins, on July 17, 2025.
The balancing act
The CBN’s embrace of stablecoins remains cautious.
Stablecoins support many of the objectives outlined in PSV 2028, including improving cross-border payments, reducing transaction costs, expanding digital commerce, increasing interoperability, and strengthening financial inclusion.
Yet, they also introduce significant risks. A poorly backed stablecoin can lose its peg. Large-scale adoption of foreign-currency-backed stablecoins could encourage digital dollarisation, weaken demand for the Naira, complicate monetary policy, and create new channels for capital flight, according to the IMF.
“Stablecoins facilitate ‘digital dollarisation,’ allowing users to hold and transact in USD-denominated assets outside the formal financial system. Widespread use of USD stablecoins in such a context could amplify capital flow volatility, deepen currency substitution (dollarisation), and weaken the effectiveness of monetary policy,” the IMF said.
It is noted that, under the current conditions of improved exchange rate stability in the country, these risks appear contained.
The IMF recommended stronger supervision, robust licencing requirements, consumer protection rules, and close coordination between the CBN and the Securities and Exchange Commission (SEC).
The CBN appears to agree and said it is working with the SEC and other stakeholders.
It wants to “develop a risk-tiered stablecoin framework; set rules for licencing, reserve backing, redemption and disclosures; run controlled stablecoin pilots for low-value trade or remittances.”
Five years after telling banks to stay away from crypto, the CBN has reached a different conclusion about stablecoins. They are no longer viewed solely as speculative digital assets. Increasingly, they are being viewed as part of the country’s payment infrastructure and will start to play a big role from 2026.
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