161
According to Nigerian fintech site NairaMetrics, Nigerian banks and payment providers have formed a consortium to launch a Naira stablecoin, cNGN. The group reportedly includes Nigeria’s biggest bank, Access Bank, which has not confirmed the story at the time of writing.
News of the consortium came on the same day that the Central Bank of Nigeria lifted restrictions that previously prevented regulated Virtual Asset Service Providers (VASPs) from holding bank accounts. However, while VASPs can now have bank accounts, the central bank reiterated that banks and other financial institutions cannot hold or transact in virtual currencies on their own account.
That begs the question, what is the definition of a virtual currency in Nigeria? And does it include stablecoins? According to a document from the Nigerian Financial Intelligence Unit, it appears to classify stablecoins as e-money rather than virtual currency, although it’s not definitive. “Digital currency can mean a digital representation of either virtual currency (non-fiat) or e-money (fiat),” it states.
The stablecoin will launch on multiple public blockchains, including Bantu, Polygon, Ethereum, BINANCE Smart Chain and Tron. Plus, cross border transactions are particularly of interest. That’s highly relevant as Nigeria is the eighth largest recipient of inbound remittances, estimated at $20.5 billion in 2023. Nigeria also has a young population of 211 million, of whom more than 62% are aged 24 or less.
The NairaMetrics article did not disclose the participants. However, the report’s author mentioned the names in a tweet. They include four banks, Access Bank, Sterling Bank, Providus and First Bank as well as payment providers Korapay, Interswitch, and Budpay. Blockchain consultants Interstellar and Convexity are also involved.
Nigeria CBDC
Meanwhile, Nigeria’s CBDC, the eNaira, has experienced slow progress. The IMF suggested offering better FX rates for remittances as one of the incentives for wider adoption. In October the central bank responded to complaints that the CBDC might impact financial stability.
