The Central Bank of Nigeria has granted the Africa Stablecoin Consortium (ASC) approval to introduce the compliant Nigerian Naira stablecoin (cNGN) within its regulatory sandbox.
This marks a pivotal moment in the Nigerian financial landscape, as the ASC, comprising leading financial institutions, fintech innovators, and blockchain experts in the country, focuses on monetary transactions.
Scheduled to go live on February 27, 2024, the cNGN is backed 1:1 by Naira reserves in designated commercial banks. It is anticipated to propel the Naira beyond borders, offering swift, cost-effective transactions on a global scale, the ASC mentioned in its official statement.
ASC's Stablecoin and Financial Security
According to the ASC, the cNGN will complement Nigeria's payment platforms, paving the way for advancements in the utilization of the Central Bank Digital Currency's (CBDC) regulatory framework and open banking.
This stablecoin aims to build a future-proof financial system that leverages technology to streamline transactions and enhance security. The ASC envisions a future where cryptocurrencies complement traditional finance, creating a robust, inclusive, and future-proof financial landscape.
Nigeria's efforts to foster widespread adoption of its CBDC, the eNaira, have been met with ongoing challenges despite initial advancements. Last year, the country announced plans to alter the model for the eNaira to encourage greater utilization, Coindesk reported.
Despite witnessing a significant surge in eNaira wallet registration, soaring to 13 million from its launch in October 2021 to March of the following year, this figure remains modest given the country's vast population of over 200 million.
Navigating Hurdles Facing eNaira Adoption
Challenges persist for many Nigerians in adopting and using the eNaira. Despite transactions amounting to 22 billion Naira ($48 million at the time) reported by the central bank in March last year, the country's broad informal economy, largely reliant on cash, poses obstacles.
Notably, Nigeria has, in the past, adopted a dynamic approach to regulating cryptocurrencies. Last year, the country's Securities and Exchange Commission (SEC) reiterated its warning against Binance labeling its operations in Nigeria as "illegal."
The regulator emphasized that Binance's operations within Nigeria are not registered or regulated by the commission, deeming them illegal. It extended this warning to all crypto platform providers in the country, urging them to cease soliciting Nigerian investors immediately.
The SEC cautioned the public against engaging with unregistered entities, highlighting the inherent risks associated with crypto investments that pose potential loss of investments.
