The Central Bank of Nigeria (CBN) has introduced new licensing and capital requirements for stablecoin issuers, requiring providers of foreign-currency-backed tokens to maintain at least $11 million in paid-up capital and banning algorithmic stablecoins outright.

The central bank issued the Regulations for the Operations of Non-Security Virtual Assets on November 5, 2026, establishing separate licensing categories for stablecoins pegged to the naira and stablecoins backed by foreign currencies.

The rules also extend beyond stablecoin issuers, covering cryptocurrency exchanges, custodians, wallet providers, payment processors, and other virtual asset service providers operating in the country.

Under the framework, issuers of foreign-currency stablecoins must maintain minimum paid-up capital of approximately $11.1 million, while issuers of naira-backed stablecoins face a requirement of approximately $7.4 million.

Foreign issuers must also establish Nigerian-incorporated entities and obtain a Class 2 Foreign Currency Issuer Licence before offering, distributing, or redeeming their tokens in the country. In practical terms, that rules out serving Nigerian users with dollar-pegged tokens from an offshore base, since distribution now requires capital, a local legal presence, and a Nigerian licence in place together.

As set out in the circular, issuers are required to obtain written approval for each token they issue, covering the token's classification, reference currency, reserve arrangements, name, ticker, and supported blockchain networks.

The ban on algorithmic stablecoins targets tokens that maintain their value through supply-adjusting mechanisms rather than direct reserve backing. The prohibition follows a broader regulatory reckoning with that model since the May 2022 collapse of TerraUSD, an algorithmic stablecoin whose failure erased tens of billions of dollars in value and intensified scrutiny of supply-adjusting designs worldwide.

The regulations further enforce compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) obligations. These include customer due diligence, sanctions screening, and transaction monitoring, alongside Travel Rule compliance across peer-to-peer (P2P) services, remittance channels, and all custodial wallets. The Travel Rule is a standard set by the Financial Action Task Force (FATF) requiring service providers to pass on sender and recipient information for covered transfers, and extending it to P2P services brings a channel widely used in Nigeria's crypto market inside the compliance perimeter.

The CBN made clear that licences already obtained in other jurisdictions will not exempt issuers from the local requirements, meaning foreign providers must complete the Nigerian licensing process regardless of their status elsewhere.

The framework arrives amid rapid stablecoin growth in Nigeria. BitKE has previously reported on surging USDT adoption in the country and the launch of cNGN, a naira-pegged token described as Africa's first regulated stablecoin, on local Nigerian exchanges. The CBN had previously set up a dedicated working group to study stablecoin adoption in the country. The same outlet also reported that South Africa's central bank warned that cryptocurrencies and stablecoins pose a financial stability risk.

How the framework plays out will depend on execution: whether foreign issuers establish Nigerian entities and secure Class 2 licences, which tokens clear the per-token approval process, and how exchanges and P2P platforms build out the monitoring and Travel Rule infrastructure the rules now require.

BitKE has published the full text of the regulations (PDF). The original report was published by BitKE (BitcoinKE).