At a glance

  • The Central Bank of Nigeria (CBN) now requires issuers of stablecoins tied to foreign currencies such as the US dollar to hold a Class 2 licence, operate through a Nigerian-incorporated company and keep at least ₦15 billion (about $11.1 million) in paid-up capital, under regulations it published this week.
  • Naira-linked issuers need ₦10 billion (about $7.4 million). Algorithmic stablecoins are banned outright, and existing operators have 180 days to apply for a licence.

The CBN set out the rules in a circular dated 5 Nov and signed by Musa Jimoh, director of its payments system policy department, Vanguard reported. ThisDay reported that they took effect the same day.

Two classes of stablecoin

The 169-page framework splits regulated tokens into Class 1 stablecoins, which reference the naira one-to-one, and Class 2 stablecoins, which reference any other currency. It also covers bank-issued deposit money tokens and service providers such as exchanges, custodians and on- and off-ramps.

Section 11.1 is the line dollar-stablecoin issuers will read first. No foreign-currency stablecoin may be “offered, distributed, marketed, exchanged, custody-held, redeemed or otherwise made available” to people in Nigeria unless the CBN has approved it and it is issued through a Class 2 licensed issuer. “There is no offshore issuer exemption from incorporation, licensing or capital,” section 15.3 says.

Other virtual asset service providers need ₦1 billion (about $743,000) in capital. Firms that also hold a Securities and Exchange Commission licence must hold that on top of the SEC’s own requirement. Tokens that count as securities stay with the SEC.

Reserves, redemption and yield

Section 2.2 lists prohibited tokens: algorithmic stablecoins, fiat-referenced tokens backed mainly by other crypto, tokens tied to sanctioned persons or jurisdictions, and anything sold as a stablecoin that does not give holders an enforceable right to redeem at par.

Issuers may not pay holders interest, yield or any other return for holding the token, and may not use a third party to get around that ban (section 13.3). The float stays with the issuer, inside the reserve rules. For naira coins, at least 20% of the reserve pool must sit as cash in a non-interest-bearing deposit at the CBN, with at least another 40% in cash and short-dated government paper.

Reserves must be ring-fenced so that holders have first claim on them if an issuer fails. The rules also say stablecoins are not deposits and are not covered by deposit insurance.

A token can be designated “systemic”, which brings tighter supervision, if its naira-equivalent supply stays above ₦500 billion (about $371 million) for 30 consecutive days, or if more than 5 million people in Nigeria hold or use it.

What changes for users

For users, the rules can reach platforms with no office in Nigeria if they serve Nigerian customers, ThisDay noted, so offshore apps may have to restrict dollar tokens that lack CBN approval. Dollar-stablecoin trades against the naira on peer-to-peer services now need separate CBN approval and must run through the foreign-exchange framework.

The rules follow Canada’s draft framework, covered in Canada’s draft stablecoin regulations on 26 Oct, and the US approach in the OCC’s GENIUS Act final rule. Like both, Nigeria’s version starts from full reserves and redemption at par. For the EU comparison, see what a MiCA-compliant stablecoin is.

What happens next

Under section 54.1, existing operators must register with the CBN within 30 days and apply for a licence within 180 days. Until then they may keep running only at their current scale. Firms that miss the deadline must stop until they are licensed.

Conversions at the CBN central rate for 6 Nov: ₦1,346.29 per dollar, ₦1,503.54 per euro. ₦15 billion is about €10.0 million.

This article is for information only and is not investment advice.