Nigeria's central bank has introduced stablecoin licensing regulations that took effect on November 5, 2026, prohibiting algorithmic stablecoins and fiat-referenced tokens primarily backed by cryptocurrencies.

Issued by the Central Bank of Nigeria (CBN), the framework establishes capital, reserve and redemption requirements for issuers serving the Nigerian market and sets a transition window for companies already operating in the sector. The framework also marks a shift in the central bank's posture toward digital assets: it barred banks from cryptocurrency transactions in February 2021, launched the eNaira digital naira in October 2021, and lifted that banking restriction in December 2023.

Prohibited Tokens and Regulatory Scope

The regulations, published by the CBN as Regulations for the Operations of Non-Security Virtual Assets in Nigeria (PDF), cover stablecoins, deposit money tokens and related virtual asset services. Oversight also extends to exchanges, custody, payments, remittances and platform-facilitated peer-to-peer services.

Under Section 2.2, the CBN prohibits stablecoins maintained primarily through algorithmic supply adjustments. The ban additionally covers crypto-backed fiat-referenced tokens, sanctioned tokens and stablecoins that lack enforceable par redemption rights. Algorithmic models attempt to hold their peg through supply adjustments and incentive mechanisms rather than dedicated reserves, an approach that came under global regulatory scrutiny after the May 2022 collapse of TerraUSD, which erased tens of billions of dollars in holder value within days.

₦10 Billion and ₦15 Billion Capital Thresholds

The framework divides permitted stablecoins into two categories based on their reference currencies. Class 1 stablecoins must track the Nigerian naira and maintain full backing through eligible naira assets, and their issuers must hold at least ₦10 billion in paid-up capital.

Class 2 stablecoins reference foreign currencies, including the U.S. dollar. Their issuers must maintain at least ₦15 billion in paid-up capital, and the CBN requires locally incorporated issuers for foreign-currency stablecoins offered to Nigerian retail customers. Foreign regulatory approval alone cannot substitute for a Nigerian licence or token approval.

The regulations do provide a limited exception for certain overseas-issued stablecoins. The CBN may recognise these tokens for approved wholesale cross-border settlements, but such arrangements cannot serve Nigerian retail customers.

Other regulated virtual asset service providers face a minimum capital requirement of ₦1 billion. Companies already licensed by Nigeria's Securities and Exchange Commission must maintain this capital separately.

Stricter Reserve and Redemption Requirements

Section 24 requires licensed issuers to maintain reserves covering all outstanding stablecoin obligations, along with a separate collateral buffer equal to at least 2% of the par value of circulating tokens.

At least 40% of each reserve pool must comprise cash or qualifying high-quality liquid assets. Non-cash assets counted toward this requirement generally cannot exceed six months in remaining maturity. Naira stablecoin issuers face an additional obligation: they must deposit at least 20% of their reserve pool directly with the CBN, and that deposit cannot count toward the separate 40% liquid-asset requirement.

Issuers must honour valid redemption requests at par, with payments normally completed by the end of the following business day. During qualifying stress events, the CBN may approve an extension of up to five business days. Standard redemptions cannot attract fees, and issuers are barred from offering interest or yield for holding stablecoins. That structure mirrors requirements regulators in other major markets have adopted, including the European Union's Markets in Crypto-Assets framework, which requires full backing for authorised stablecoins and bars issuers from paying interest to holders.

180-Day Transition for Existing Operators

Section 54 provides a transition process for businesses already operating when the regulations took effect. Existing operators must register with the CBN within 30 calendar days and begin supervisory reporting within 60 days, unless the regulator requires earlier reporting. Companies must also submit complete licensing applications within 180 calendar days. These deadlines define the path for existing operators to remain in the Nigerian market, with foreign-currency stablecoin issuers facing the added step of Nigerian incorporation to keep serving retail customers.

Anti-money-laundering and counter-terrorist-financing obligations apply from commencement. During the transition, businesses may continue operating only at their existing scale and under applicable interim conditions, and existing foreign-currency stablecoin arrangements require express CBN permission to maintain access during assessment.

The regulations also extend oversight to wallet providers, custodians, payment gateways and peer-to-peer platforms, which must obtain approvals corresponding to their regulated activities.

Nigeria's framework assesses tokens by their economic substance, function and risks rather than their underlying blockchain. The CBN's rules do not displace the Securities and Exchange Commission's jurisdiction over securities and investment products, and firms conducting regulated payment activities must still obtain applicable central bank permissions.

Related Industry Coverage

In separate reporting, CoinCentral covered Circle's third-quarter financial results on November 4, examining the finances of the USDC issuer independently of Nigeria's regulatory changes. CoinCentral also reported on November 3 that Consensys introduced a bridgeless transaction network for institutions, a development concerning cross-ledger settlement rather than Nigeria's licensing process, and covered expanding Solana stablecoin activity the same day.

This article is based on reporting by CoinCentral.