A collaborative effort among Nigerian banks, fintechs, and blockchain firms is underway to establish the inaugural regulated Naira stablecoin, referred to as cNGN. The stablecoin is expected to be launched this new year.
This consortium-driven Naira stablecoin is designed to be compliant and regulated, featuring a value pegged on a one-to-one basis to the Nigerian Naira (NGN). Distinguishing itself from earlier stablecoin iterations, cNGN will hold legal recognition as a currency and be under the ownership of Nigerian banks.
On December 22, Nigeria’s Central Bank lifted a two-year restriction on cryptocurrency transactions in the country. The central bank had initially imposed a ban on crypto transactions in 2021, citing concerns related to money laundering and terrorism financing.
In contrast to previous iterations, cNGN will not function as a Central Bank Digital Currency (CBDC) but rather as a cryptocurrency, akin to other stablecoins. Additionally, the consortium will oversee the maintenance of the stablecoin, and ownership will be vested in its affiliated banks.
In the past, Nigeria has undertaken various initiatives to embrace digital currency. In 2012, the country introduced a cashless policy with the goal of boosting the efficiency of its payment system, lowering the costs of banking services, and enhancing the effectiveness of monetary policy.
However, the reception of cNGN’s predecessor, a Central Bank Digital Currency (CBDC) named eNaira, has been underwhelming since its launch on October 25, 2021. Despite nearly 40 million people in Nigeria requiring a bank account, there has been a challenge in persuading citizens to adopt the CBDC, with only one in every 200 citizens showing interest.
