Navigating Nigeria's Regulatory Approach To Stablecoin

1. INTRODUCTION

The early skepticism surrounding cryptocurrencies is giving way to broader acceptance, with stablecoins playing a central role in this shift. Stablecoins are digital tokens that are designed to remain stable in value relative to a fiat currency (like the US dollar or Nigerian Naira) or a commodity (like Gold).¹ The appeal of stablecoins lies in their price stability and this has driven adoption for payments, remittances and savings especially in markets where local currencies are volatile. In Nigeria the combination of currency weakness, high inflation and robust crypto adoption has made stablecoins like Tether (USDT) and USD Coin (USDC) immensely popular. A 2024 report estimated that more than 26 million Nigerians (roughly 12 % of the population) were already using stablecoins for remittances, savings and cross‑border purchases.² Recognising this growth and the risks of an unregulated market, Nigeria has gradually pivoted from prohibiting crypto to building a regulatory framework for digital assets and, more recently, stablecoins.

This article reviews Nigeria's evolving regulatory landscape for stablecoins, drawing on the Securities and Exchange Commission's (SEC) rules, the Accelerated Regulatory Incubation Programme (ARIP) and the Investment & Securities Act 2025. It then compares Nigeria's approach with leading global frameworks — the United States' GENIUS Act, the European Union's MiCA regulation, Singapore's MAS stablecoin regime, Hong Kong's Stablecoin Ordinance, and Japan's revised Payment Services Act and considers how Nigeria can align its rules with international best practice.

2. Defining Stablecoins and Their Types

Under the SEC's amended Rules on Digital Assets, a stablecoin is defined as "a virtual asset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets, including one or more official currencies".³ The rules create a sub‑category for fiat‑referenced stablecoins, meaning tokens that reference one or more fiat currencies and are intended for use as a means of payment or store of value.⁴ This distinction mirrors frameworks elsewhere (such as the EU's division between e‑money tokens and asset‑referenced tokens) and provides clarity on which instruments fall under the SEC's jurisdiction.

Stablecoins can be classified by the assets backing them:

1. Fiat collateralized: They are backed by traditional money like USD. For every stable coin, there ought to be an equal amount of real money held in a bank. E.g. Tether (USDT), USD Coin (USDC), True USD (TUSD) etc.
2. Crypto collateralized: They are other cryptos like Ethereum that are held in a smart contract to back the stablecoin, often with extra collateral to manage price swings.
3. Algorithmic stablecoins: everything here is controlled by codes. It reduces or increases the number of coins in circulation to keep the price steady. E.g. AMPL, the old Terra (LUNA).
4. Commodity-Collateralized: this is backed by real asset like Gold. It is linked to the value of a commodity.⁵

Nigeria's regulatory focus is primarily on fiat‑referenced stablecoins because they can substitute for local currency and influence monetary policy.

3. Stablecoin Adoption and the cNGN

Despite the nationwide prohibition on Banks to deal with cryptocurrency imposed in 2021, Nigeria remained an active player in the global crypto market. Stablecoins such as USDT and USDC dominated usage in the country because they offered faster remittances, reliable reserves, held greater value compared to the Naira, and were easily accepted worldwide. For many Nigerians, they provided a stable hedge against inflation and currency volatility.⁶

In February 2025 the African Stablecoin Consortium, (ASC), a coalition of banks , fintechs and blockchain firms – launched the compliant Nigerian Naira (cNGN)⁷. The cNGN is fully backed by commercial‑bank reserves, integrated with Know‑Your‑Customer (KYC) and Anti‑Money‑Laundering (AML) checks, and interoperable with multiple public blockchains. Unlike the eNaira, which is issued directly by the Central Bank of Nigeria (CBN), the cNGN is privately issued via participating banks and fintechs, making Nigeria the first African country to unveil a regulated Naira‑pegged stablecoin.⁸

4. Nigeria's Regulatory Evolution

Nigeria's journey toward digital asset regulation has unfolded in deliberate stages, reflecting both caution and ambition.

a. The first Step - Initial 2022 Rules

Nigeria's first step toward regulating digital assets came in May 2022, when the SEC issued rules on the Issuance, Offering Platforms and Custody of Digital Assets. These rules established licensing requirements for digital asset issuers, exchanges and custodians. Although they did not mention stablecoins specifically, they laid the groundwork for classifying digital assets and regulating crypto‑asset service providers.

b. Accelerated Regulatory Incubation Program (ARIP) 2024 – A Regulatory Sandbox

In 2024 the SEC introduced the Accelerated Regulatory Incubation Programme (ARIP), a sandbox to onboard Virtual Asset Service Providers (VASPs) and Digital Investment Service Providers (DISPs). ARIP allows qualified entities to operate under temporary supervision while the SEC studies their business models and develops long‑term regulations. Participation is open to token issuers, exchanges and other DLT platforms incorporated in Nigeria with a local office and resident chief executive. Entities may operate within ARIP for up to 12 months before applying for full registration. While ARIP has encouraged innovation, its high capital requirements and reporting obligations can deter smaller start‑ups.⁹

c. Investments and Securities Act 2025

The Investment & Securities Act (ISA) 2025 represents a landmark reform. The Act explicitly classifies digital and virtual assets — including stablecoins — as securities and grants the SEC broad powers to register and regulate virtual‑asset exchanges and service providers.¹⁰ This legal clarity positions Nigeria as the first African jurisdiction to recognise stablecoins within securities law.¹¹ The ISA empowers the SEC to set disclosure standards, impose prudential requirements and enforce investor‑protection rules for stablecoin issuers and intermediaries.

d. Amended Rules on Digital Assets Issuance, Offering Platform, Exchange and Custody (the Amended "VASP Rules ")

Following the ISA 2025, the SEC amended its Rules on Digital Asset Issuance, Platforms, Exchange and Custody. These amendments:

• Define stablecoins and fiat‑referenced stablecoins as noted above
• Recognise stablecoins as a subset of digital assets, meaning issuers must register as VASPs and comply with capital, governance and disclosure requirements.
• Specify that virtual‑asset services include operating trading platforms, exchanging virtual assets for fiat or other assets, and other regulated functions.
• Require stablecoin issuers to adhere to strict compliance standards, including KYC/AML procedures and transparent reserve management, to foster market trust.

While these measures offer much‑needed clarity, they also pose challenges; for instance, high entry costs, complex compliance obligations, cybersecurity risks and limited public awareness may slowdown adoption. Continued collaboration with industry and adjustments to the rules will be necessary to support innovation without compromising consumer protection.

Footnotes

1 Peterson K. Ozili , " Nigeria cNGN Stablecoin: everything you need to know about cNGN and eNaira CBDC" (20 April 2024) file:///C:/Users/HomePC/Downloads/ssrn-4806043.pdf accessed on 15th August 2025

2 Folake Balogun, Nigeria tops global stablecoin adoption as Africa's digital asset booms, Businessday 20 June 2025 https://businessday.ng/technology/article/nigeria-tops-global-stablecoin-adoption-as-africas-digital-asset-booms/ accessed on 20th August 2025.

3 Clause 5.0. of the Amendments to the Rules on Digital Assets Issuance, Offering Platform, Exchange and Custody (Amended VASP Rules) 2025

4 Clause 5.0. of the Amendments to the Rules on Digital Assets Issuance, Offering Platform, Exchange and Custody (Amended VASP Rules) 2025

5 Emniee, Stablecoin: Adoption and challenges in Nigeria medium (May 17 2024) https://medium.com/%40enny_writes/stablecoin-adoption-andchallenges-in-nigeria-46f512c35a9f accessed 26th August 2025

6 This Is How Nigerians Quietly Ditched the Naira—for Stablecoins accessed on 15th August 2025

7 Sam Adeyemo, Naira-backed stablecoin cNGN debuts on local exchanges, Mariblock (6th February 2025) https://www.mariblock.com/nairapegged-stablecoin-cngn-launches-lists-on-exchanges/ accessed 26th August 2025.

8 Oge Okene, "cNGN: Nigeria's first regulated stablecoin explained, a new digital naira?" Business Day (20 February 2025) cNGN: Nigeria's first regulated stablecoin explained, a new digital naira? - Businessday NG accessed on 17th August 2025

9 https://chambers.com/articles/overview-of-the-sec-s-amended-digital-assets-rules?utm_source=chatgpt.com accessed on 26th August 2025

10 Section 174 of the Investments and Securities Act 2025

11 Coinworld, "Nigeria Becomes First African Nation to Regulate Stablecoins Under 2025 Framework" (25 July 2025) Nigeria Becomes First African Nation to Regulate Stablecoins Under 2025 Framework accessed on the 13th of August 2025

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