The first regulated stablecoin tied to the Naira in Nigeria, cNGN, has been listed on Quidax, a cryptocurrency firm that was granted a provisional license in August 2024. The action highlights Nigeria’s changing approach to crypto legislation, striking a balance between control and the expanding use of digital currencies. It comes one month after Busha, another provisionally-licensed crypto firm, launched the cNGN.
With the potential for expanded use in payments, transfers, and digital currency exchanges, the March 12 listing will enable Quidax users to send and receive cNGN between wallets. Nigeria’s government appears to be more interested in incorporating cryptocurrency into the financial system than in limiting it, as the Securities and Exchange Commission (SEC) is in charge of cNGN’s implementation.
The SEC is offering a much-needed framework that helps protect investors while fostering innovation by regulating digital assets like the cNGN. One of the most important factors in attracting institutional investors to the cryptocurrency sector is frequently mentioned as regulatory control. In addition to safeguarding users, this approach helps the industry gain more legitimacy overall.
The ambiguity that has frequently dogged the Nigerian cryptocurrency market is further lessened by the SEC’s assistance in establishing a clear regulatory framework for stablecoins. Greater adoption throughout the country may result from more Nigerians feeling at ease using bitcoin marketplaces as a result of increased trust in the legal framework governing digital assets.
The cNGN stablecoin was introduced in February 2024 by the African Stablecoin Consortium (ASC), which is made up of Convexity, Alpha Geek Technologies, Digital Currency Coalition, and Interstellar, following three years of development. The collaboration applied under the name “WrappedCBDC Ltd,” a joint venture established for blockchain-based digital currency projects, when the SEC opened the Regulatory Incubation (RI) program in June 2024.
In August 2024, the partnership was granted approval in principle. A request for comments was not immediately answered by Convexity. A request for comment was not immediately answered by the Digital Currency Coalition. A request for comment from Interstellar was not immediately answered.
The cNGN stablecoin has gradually gained traction since its launch; according to its website, there are currently 127 holders and 121.3 million tokens in circulation. The addition of Quidax broadens its scope after it was first listed on Busha. Exchanges looking to list cNGN are vetted by WrappedCBDC, which evaluates their reserve management skills to ensure supply stability. Additionally, a ₦100,000 verification charge is needed to pay for third-party services. Some cryptocurrency users, however, have questioned the need for cNGN, claiming that the Naira is already freely accessible on well-known cryptocurrency sites.
“There’s already fiat Naira existing in the crypto ecosystem,” said Chibunna Kingsley, a Lagos-based crypto trader. “So it is hard to see why traders need the cNGN.”
More Nigerians could be able to trade on bigger exchanges if the cNGN permits decentralized platforms that have already delisted the Naira to use the stablecoin. To strengthen the stablecoin’s position as a remittance instrument, the ASC wants to see it listed on more cryptocurrency exchanges. User acceptance will be the true battlefield, and cNGN’s success will depend on its ability to outperform current Naira integrations and demonstrate its unique value proposition.
Other stablecoins linked to African currencies may follow as the cNGN stablecoin gains popularity, which might inspire other countries on the continent to investigate their own digital currency alternatives. African countries might embrace blockchain as a more effective and economical method of storing and transferring money by using such technology, hence surpassing traditional banking infrastructure.
