Nigeria’s Central Bank approves cNGN stablecoin for February launch

The Africa Stablecoin Consortium (ASC) has received approval from the Central Bank of Nigeria (CBN) to pilot its cNGN stablecoin within the regulatory sandbox, with the launch scheduled for Feb. 27, 2024.

In a Jan. 4 blog update, the ASC, which encompasses a partnership of Nigerian banks and fintech operators, announced that the cNGN stablecoin meets the regulatory standards and requirements as established by the CBN, the Nigerian Securities and Exchange Commission and the Nigerian Financial Intelligence Unit.

The group also emphasized their ongoing engagement with these regulatory bodies to maintain compliance, safeguard consumer interests and uphold transparency in their operations.

The cNGN is designed to augment, rather than replace, the eNaira, the central bank digital currency (CBDC) that the CBN has issued. Unlike the eNaira, which the CBN created with broader capabilities, the ASC oversees the cNGN.

The stablecoin is interoperable with strategic blockchains like Bantu and BNB Smart Chain, with plans to expand its compatibility across major blockchain networks.

The cNGN token pegged 1:1 to the Nigerian naira, aims to facilitate seamless transactions between the naira and digital currencies globally. It is backed by Naira reserves in designated commercial banks.

The stablecoin is positioned to ease international transactions for Nigerians abroad, offering a cost-effective alternative to traditional remittance methods.

The initiative aligns with the CBN’s revised stance on cryptocurrencies. A Dec. 22, 2023 circular revealed the lifting of the 2021 ban on Nigerian banks’ involvement in cryptocurrency transactions, recognizing the growing global trend and inevitable integration of cryptocurrencies in Nigeria’s financial landscape.

Nigeria’s journey towards digital currency began with the introduction of a cashless policy in 2012. The initiative aimed to enhance the efficiency of the payment system, lower the costs of banking services, and bolster the effectiveness of monetary policy by reducing reliance on cash transactions.

However, the adoption rate of cNGN’s predecessor, CBDC eNaira, has been low since its launch on Oct. 25, 2021, despite nearly 40 million people in the country needing a bank account. Nigeria’s central bank has struggled to convince citizens to use CBDC, but the digital currency has attracted only one in 200 citizens.