Nigeria's Central Bank Approves cNGN Stablecoin Launch

Nigeria’s Central Bank Approves cNGN Stablecoin Launch

Time Stamp: January 5, 2024 9:13 AM
Source Node: 2430654

The Central Bank of Nigeria has granted the Africa Stablecoin Consortium (ASC) approval to introduce Compliant Nigerian naira stableCoin (cNGN) within its regulatory sandbox.

This marks a pivotal moment in the Nigerian financial
landscape, as the ASC, comprising leading financial institutions, fintech
innovators, and blockchain experts in the country, focuses on monetary
transactions.

Scheduled to go live on February 27, 2024, the
cNGN is backed 1:1 by naira reserves in designated commercial banks. It is expected to
propel the naira beyond borders, offering swift, cost-effective transactions
on a global scale, the ASC mentioned in its official statement.

According to the ASC, cNGN will complement Nigeria‘s
payment platforms, paving the way for advancements in the utilization of the Central Bank Digital Currency’s (CBDC) regulatory framework and open banking.

This stablecoin aims to build a
future-proof financial system that leverages technology to streamline
transactions and enhance security. The ASC envisions a future where cryptocurrencies
complement traditional finance, creating a robust, inclusive, and future-proof
financial landscape.

Nigeria’s efforts to foster widespread adoption of
its CBDC, the eNaira, have been met with ongoing
challenges despite initial advancements. Last year, the country announced
plans to alter the model for the eNaira to encourage greater utilization, Coindesk
reported.

Despite witnessing a significant surge in eNaira wallet
registration, soaring to 13 million from its launch in October 2021 to March of
the following year, this figure remains modest given the country’s vast
population of over 200 million.

Navigating Hurdles Facing eNaira Adoption

Challenges persist for many Nigerians in adopting
and using the eNaira. Despite transactions amounting to 22 billion
naira ($48 million at the time) reported by the central bank in March last
year, the country’s broad informal economy, largely reliant on cash, poses
obstacles.

Notably, Nigeria has, in the past, adopted a dynamic approach to regulating cryptocurrencies. Last year, the country’s Securities and Exchange Commission (SEC) reiterated its warning against Binance labeling its operations in Nigeria as “illegal.”

The regulator emphasized that Binance’s
operations within Nigeria are not registered or regulated by the commission,
deeming them illegal. It extended this warning to all crypto platform providers in the country, urging them to cease soliciting Nigerian investors immediately.

The SEC cautioned the public against engaging with unregistered
entities, highlighting the inherent risks associated with crypto
investments that pose potential loss of investments.

The Central Bank of Nigeria has granted the Africa Stablecoin Consortium (ASC) approval to introduce Compliant Nigerian naira stableCoin (cNGN) within its regulatory sandbox.

This marks a pivotal moment in the Nigerian financial
landscape, as the ASC, comprising leading financial institutions, fintech
innovators, and blockchain experts in the country, focuses on monetary
transactions.

Scheduled to go live on February 27, 2024, the
cNGN is backed 1:1 by naira reserves in designated commercial banks. It is expected to
propel the naira beyond borders, offering swift, cost-effective transactions
on a global scale, the ASC mentioned in its official statement.

According to the ASC, cNGN will complement Nigeria‘s
payment platforms, paving the way for advancements in the utilization of the Central Bank Digital Currency’s (CBDC) regulatory framework and open banking.

This stablecoin aims to build a
future-proof financial system that leverages technology to streamline
transactions and enhance security. The ASC envisions a future where cryptocurrencies
complement traditional finance, creating a robust, inclusive, and future-proof
financial landscape.

Nigeria’s efforts to foster widespread adoption of
its CBDC, the eNaira, have been met with ongoing
challenges despite initial advancements. Last year, the country announced
plans to alter the model for the eNaira to encourage greater utilization, Coindesk
reported.

Despite witnessing a significant surge in eNaira wallet
registration, soaring to 13 million from its launch in October 2021 to March of
the following year, this figure remains modest given the country’s vast
population of over 200 million.

Navigating Hurdles Facing eNaira Adoption

Challenges persist for many Nigerians in adopting
and using the eNaira. Despite transactions amounting to 22 billion
naira ($48 million at the time) reported by the central bank in March last
year, the country’s broad informal economy, largely reliant on cash, poses
obstacles.

Notably, Nigeria has, in the past, adopted a dynamic approach to regulating cryptocurrencies. Last year, the country’s Securities and Exchange Commission (SEC) reiterated its warning against Binance labeling its operations in Nigeria as “illegal.”

The regulator emphasized that Binance’s
operations within Nigeria are not registered or regulated by the commission,
deeming them illegal. It extended this warning to all crypto platform providers in the country, urging them to cease soliciting Nigerian investors immediately.

The SEC cautioned the public against engaging with unregistered
entities, highlighting the inherent risks associated with crypto
investments that pose potential loss of investments.

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