Nigeria is set to unveil its inaugural regulated stablecoin, known as cNGN, in a collaborative effort involving Nigerian banks, fintechs, and blockchain companies.
Distinguished from previous stablecoin iterations, cNGN will be a regulated Naira stablecoin, compliant with legal standards, and tethered to the Nigerian Naira (NGN) at a one-to-one ratio. Unlike its predecessors, cNGN will hold the official status of currency and will be owned by Nigerian banks. According to sources cited by Forbes, the stablecoin is anticipated to be launched in the coming year.
Unlike a Central Bank Digital Currency (CBDC), cNGN will function as a cryptocurrency, akin to other stablecoins. The consortium will manage and own the stablecoin through its affiliated banks. However, certain details about cNGN, such as the chosen blockchain and the intended applications and services for consumers, remain undisclosed and are expected to be clarified by the consortium.
It is noteworthy that Nigeria has recently reversed its stance on cryptocurrency transactions. Previously, the Central Bank had imposed regulations in February 2021, barring financial institutions from engaging in cryptocurrency-related transactions. The shift in policy acknowledges the pivotal role of cryptocurrencies in global finance and their inevitable integration into the Nigerian economy.
Nigeria has previously endeavored to transition to digital currency, implementing a cashless policy in 2012 to enhance payment system efficiency, reduce banking service costs, and improve monetary policy effectiveness.
Despite the introduction of the Central Bank Digital Currency (CBDC) precursor, eNaira, on October 25, 2021, its adoption has been lackluster. Despite nearly 40 million Nigerians in need of a bank account, convincing citizens to embrace the CBDC has proven challenging, with only one in every 200 citizens opting for its use.
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