Nigeria to launch first regulated ‘cNGN’ stablecoin

A coalition of Nigerian banks, fintechs, and blockchain firms is working to create the first regulated Naira stablecoin, known as cNGN.

This consortium-based Naira stablecoin will be compliant and regulated, with its value pegged on a one-to-one basis to the Nigerian Naira (NGN). Unlike previous stablecoin versions, cNGN will be legally recognized as currency and owned by Nigerian banks.

As per sources reporting to Forbes, the stablecoin is expected to be launched this new year.

Differing from prior versions, cNGN will not be a Central Bank Digital Currency (CBDC) but a cryptocurrency, similar to other stablecoins. Moreover, the stablecoin will be maintained by the consortium and will be under the ownership of its affiliated banks.

Nevertheless, there are still many unknowns about the cNGN that will need to be clarified by the consortium, such as the blockchain it will use and the planned apps and services for consumers.

Forbes

It is worth noting that Nigeria has just recently authorized cryptocurrency transactions. Previously, regulations implemented by the country’s Central Bank in February 2021 banned financial institutions from conducting transactions related to cryptocurrencies.

This change of stance is due to the recognition of the significant role cryptocurrencies play in global finance and their inevitable use in Nigeria.

In the past, Nigeria has made several attempts to transition towards digital currency. In 2012, the country implemented a cashless policy aiming to enhance its payment system’s efficiency, reduce banking services costs, and improve monetary policy effectiveness.

However, the adoption of cNGN’s predecessor, a Central Bank Digital Currency (CBDC) named eNaira, has been lackluster since its inception on October 25, 2021. Despite almost 40 million people in Nigeria requiring a bank account, it’s a struggle to convince citizens to use the CBDC, which has attracted only one in every 200 citizens.