Key Insights
- Nigeria central bank approves local stablecoin pilot for naira-pegged token
- Approves Africa Stablecoin Consortium to test cNGN from Feb 27 in regulatory sandbox
- Signals increased openness to crypto innovations that widen financial access
LAGOS – Nigeria’s central bank has greenlit local consortium Africa Stablecoin to test a naira-pegged digital token from Feb. 27th, marking increased openness towards homegrown cryptocurrency projects after prior hostilities.
The Africa Stablecoin Consortium (ASC), comprising leading Nigerian lenders and fintechs, revealed its regulatory approval this week to launch tokenized “cNGN” coins backed 1:1 by national fiat reserves during a six-month sandbox.
It contrasts sharply with previous crypto prohibitions given claims digital assets spur money laundering and undermine capital controls. But authorities now eye potential benefits if new mediums boost financial inclusion and cheaply transmit diaspora inflows.
“The cNGN serves as a complement, not a substitute for the eNaira,” ASC said in a Thursday blog, referencing Nigeria’s existing central bank digital currency (CBDC) lacking global blockchain interoperability.
The group plans multi-chain integration spanning Bantu, BNB Smart Chain, and eventually major networks like Ethereum. It claims localized expertise and oversight by Nigerian regulators ensures responsible innovation and testing.
The Central Bank of Nigeria (CBN) seemingly concurred in a Dec. 22 circular to commercial lenders stating the financial system must actively “support and facilitate blockchain technology.”
Yet the cNGN’s fate post-pilot remains uncertain with final approvals no guarantee. Former CBN Governor Godwin Emefiele said in late 2022 CBDCs like the eNaira best preserve sovereignty and oversight versus decentralized systems.
But counterparts argue symbiosis melding the strengths of each model – stability versus reach – may enable cheaper remittance inflows and trade.
Sandbox data and design tweaks will now provide real-world evidence on whether the cNGN can walk that line in improving everyday transactions without compromising compliance.