CBN Approves Naira Stablecoin, Set to Launch on February 27
The Central Bank of Nigeria (CBN) has given its nod for the launch of the Nigerian naira (cNGN) stablecoin. This digital currency, set to debut on February 27, 2024, is backed by the Africa Stablecoin Consortium (ASC), a collaboration of Nigerian financial institutions, fintechs, and blockchain experts.
Stablecoins, designed to maintain a constant value, are often tethered to another currency, commodity, or financial instrument. The cNGN stablecoin aims to revolutionize financial transactions and bridge the gap between the Nigerian Naira and the global market through blockchain technology.
In a statement released on Thursday, the ASC highlighted that the cNGN stablecoin has met the regulatory standards set by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU). The consortium is committed to ensuring secure and compliant financial interactions.
The ASC’s statement declared, “This ushers in a new era of financial fluidity, bridging the Nigerian Naira with the global market through blockchain technology.”The cNGN Stablecoin is backed 1:1 by Naira reserves held in designated commercial banks. This transformative digital asset aims to facilitate worldwide remittances, commerce, trade, and investment, reducing settlement times and transaction costs significantly.
The ASC envisions the cNGN as more than just a currency, stating, “cNGN shortens settlement times, enabling payments that traverse the globe swiftly, mirroring the speed of a text message and at a fraction of the cost.
“Advantages of the Naira StablecoinThe ASC outlines several benefits of the cNGN Stablecoin, emphasizing its potential to simplify global transactions. Users can seamlessly pay for goods and services worldwide without facing the challenges of currency conversion and high international transaction fees.The consortium envisions the cNGN facilitating instant and cost-effective international remittances. “Supporting your loved ones back home becomes as simple as a quick tap on your phone,” the ASC notes.The cNGN aims to eliminate the complexities of traditional international trade, allowing users to send and receive payments globally, fostering economic growth and global success.
The stablecoin is positioned as a tool to enable freelancers to work internationally without the limitations of location and outdated payment systems.Shift in CBN’s Stance on Cryptocurrency The unveiling of the cNGN marks a significant shift in the CBN’s stance on digital currencies. Over two years after banning digital currency transactions, the apex bank has now issued operational guidelines on virtual asset service providers (VASPs) to banks and other financial institutions.
This move signals a departure from the earlier restrictions on crypto transactions, citing concerns such as money laundering, terrorism financing, cybercrime, and cryptocurrency volatility.VASPs, responsible for facilitating exchanges between virtual assets and fiat currencies, are now subject to new guidelines, showcasing the regulatory evolution in Nigeria’s approach to digital currencies.