Nigeria Lifts Crypto Ban to Work on New Stablecoin

The Central Bank of Nigeria (CBN) has recently lifted its strict anti-crypto crackdown that barred banks from handling crypto-related transactions for two years. This move coincides with collaborative efforts among Nigerian banks to introduce a new stablecoin called cNGN.

The CBN has expressed global interest in rethinking the harsh restrictions imposed by 2021 and the acceptance of cryptocurrencies.

CBN has exposed strict requirements

The Nigerian regulator has unveiled standards and conditions for banking relationships and revised guidelines for opening accounts for virtual asset service providers (VASPs).

Among them, banks have been ordered to collect the Bank Verification Number (BVN) of management members of crypto businesses before initiating account settings. The CBN further said that crypto firms must obtain a license from the Securities and Exchange Commission of Nigeria. In addition, these organizations must be registered with the country's Corporate Affairs Commission before gaining access to an account.

These guidelines will strengthen the risk management protocols in the banking sector, particularly regarding the operations of licensed VASPs. The regulator stressed that financial institutions cannot hold, trade or conduct transactions in cryptocurrencies using their own accounts.

In the year In February 2021, the CBN banned traders from using traditional banks for crypto-related transactions and instructed banks to quickly identify and close accounts related to cryptocurrency trading.

Nigerian Banks Unity for cNGN

Meanwhile, major local banks – Access Bank, Sterling Bank, Providence, Corapai, First Bank, Interstellar, Interswitch, Budpay and Convexity – are collaborating to develop the cNGN stablecoin.

cNGN is backed by the Nigerian Naira, the country's fiat currency. This stablecoin complements the Central Bank of Nigeria's digital currency (CBDC) eNaira. Since its inception, Nigeria's eNaira has faced challenges in gaining widespread acceptance.

“The main reason why the CBN approved the banks is because they want the financial system to support/facilitate blockchain technology and they are aware of the complexities involved. [the Nigerian] SEC is designed to do digital service,” journalist Olumide Adesina explained.

Read more: Guide to the Best Stablecoins in 2024

Nigeria is one of the most crypto-friendly regions globally. According to Chinalysis, the country ranks second in the Global Crypto Adoption Index. In addition, Nigeria leads the African region in terms of crude trade.

“Given the instability of the Nigerian economy, many citizens are looking for financial options that improve the value of cryptocurrency,” Chainalysis explained.