Central Bank of Nigeria enacts new stablecoin regulations, with ₦15B capital requirement and ban on algorithmic models

Central Bank of Nigeria Unveils Stablecoin Regulations

The Central Bank of Nigeria (CBN) has unveiled a set of comprehensive regulations aimed at managing the issuance of stablecoins within the country’s financial landscape. Effective from November 5, 2026, these rules mandate that companies issuing stablecoins pegged to foreign currencies must maintain a minimum capital of ₦15 billion, while naira-backed stablecoin issuers are required to uphold at least ₦10 billion in paid-up capital.

Classification and Prohibitions

Under the new framework, distinctly categorized stablecoins will be recognized based on their currency backing—local currency stablecoins fall into Class 1, and foreign currency stablecoins are classified as Class 2.

This regulatory move addresses the burgeoning interest in stablecoins as a mechanism for payments, savings, and cross-border transactions in Nigeria. However, the CBN has explicitly prohibited algorithmic stablecoins, which rely on dynamic supply and demand mechanisms instead of solid reserve backing, as well as those linked to fiat currencies but predominantly supported by cryptocurrencies. This prohibition extends to any tokens issued by entities under sanctions or from jurisdictions faced with sanctions.

Licensing Requirements

Issuers of dollar-backed stablecoins and other foreign currency tokens must create a locally incorporated entity and acquire a Foreign Currency Issuer License from the CBN. Each issuer will also need approval for every stablecoin they wish to launch, detailing aspects such as the reference currency, reserve strategies, and supported blockchain networks. Notably, all issuers must secure local regulatory approval, as licenses from other jurisdictions or agreements with Nigerian intermediaries will not suffice.

Capital Requirements and Compliance

In addition to these licensing stipulations, the CBN has set forth a framework for businesses engaged in other regulated virtual asset services, imposing a base capital requirement of ₦1 billion. This requirement stands apart from any licenses already held with the Securities and Exchange Commission (SEC).

The CBN’s actions come in the wake of warnings issued by the International Monetary Fund regarding the potential implications of increasing stablecoin adoption on Nigeria’s foreign exchange management and monetary strategy. Companies engaging in the issuance or management of stablecoins will also need to maintain consistent and adequate reserves, confirmed through daily checks against outstanding liabilities, with a requirement of a 2% reserve buffer above the total value of issued tokens.

Moreover, these businesses must implement robust customer identity verification, sanctions screening, and ongoing monitoring of transactions, adhering to anti-money laundering and combatting the financing of terrorism frameworks.

Industry Developments and Compliance Timeline

In a recent development, Tether expressed intentions to collaborate with Shiga in providing self-custodial wallet services across Africa and the Gulf, contingent on the latter’s pending Nigerian Digital Asset Intermediary license. Operators currently engaged in regulated virtual asset services are granted 180 days from the regulations' start date to submit their applications for the appropriate licenses, although they must first register with the CBN and commence supervisory reporting as early as 30 days post-regulation launch.

Conclusion

The CBN wields significant authority in overseeing stablecoins and virtual assets utilized in various financial operations, while the SEC maintains its role in regulating securities and investment channels. The rigorous structure is designed to promote a safe and innovative digital finance environment in Nigeria, yet it also demands strict adherence from companies in order to operate legally within its jurisdiction.