The Central Bank of Nigeria (CBN) has introduced new rules requiring issuers of foreign-currency stablecoins, including the companies behind dollar-pegged tokens such as USDT and USDC, to hold at least ₦15 billion ($11.16 million) in paid-up capital to operate in Nigeria.
The regulations, released on Thursday evening, require foreign issuers to establish licensed entities in Nigeria and meet local capital, reserve and operational requirements, or lose market access. The CBN also set a ₦10 billion ($7.44 million) minimum capital requirement for issuers of naira-backed stablecoins.
The rules come almost three months after the CBN opened the second cohort of its regulatory sandbox in August. That cohort created a dedicated track for stablecoin issuers and other virtual asset companies to test products under the bank’s supervision for the first time.
A formal licensing system
The framework creates a licensing regime for stablecoins, which are digital tokens designed to hold a fixed value against fiat currencies such as the US dollar or the naira. Businesses and individuals in Nigeria use them to move money across borders, settle transactions and access dollars.
ALSO: FG 750m Cloud Investment Target Hinges on Fintech, Power, Policy Certainty – Experts
Under the rules, foreign-currency stablecoins can only be offered, distributed or made available to Nigerians through a locally incorporated and licensed issuer. Approvals from foreign regulators will not exempt companies such as Tether and Circle from Nigeria’s requirements.
Issuers must also:
- Maintain reserves backing their tokens
- Set up arrangements for customers to redeem them
- Submit regular reports to the regulator
- Provide monthly reserve attestations
The CBN may impose additional capital or liquidity requirements on issuers it considers a risk to the financial system.
Deadlines for existing operators
Existing operators will have 180 days from the date the regulations take effect to apply for a licence, although the CBN has not yet said when that period begins. Companies must register with the regulator within 30 days and begin submitting supervisory reports within 60 days.
“Failure to submit within that period shall require cessation until the required licence or authorisation is obtained,” the CBN said.
Operators of foreign-currency stablecoins will also face scrutiny over their Nigerian incorporation, licensing and distribution arrangements. Companies that want to keep operating while their applications are reviewed must obtain explicit regulatory permission.
Algorithmic stablecoins banned
The rules prohibit algorithmic stablecoins, which rely mainly on adjustments to token supply to maintain their value without enough reserve backing. Unlike conventional stablecoins backed by fiat currencies or other valuable assets such as gold, they are more vulnerable to sudden losses in value and harder to regulate.
Global issuers expanding in Nigeria
The new framework arrives as major issuers push deeper into the country. In August, Tether, the El Salvador-based company behind USDT, sought to hire an Expansion Manager in Nigeria. This week, Circle, the US issuer of USDC, appointed Gillian Darko, a former strategy executive at stablecoin infrastructure company Yellow Card, as Vice President and Head of Africa.
The moves underline Africa’s growing importance to global stablecoin companies, even as regulators seek tighter control over how dollar-backed digital assets are distributed and used within their borders.
Why it matters
The CBN says the framework aims to give it greater oversight of non-security virtual assets used for payments. Stablecoins increasingly help businesses and merchants move money across borders and source foreign exchange (FX), and help fintechs access dollar liquidity to pre-fund international payments and settlements.
