Nigeria is set to witness the launch of its first-ever licensed stablecoin cNGN. According to reports, the stablecoins will be licensed by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).
The launch of the country’s first compliant stablecoin could be the birth of things to come in the sector, considering the full participation of the SEC and CBN. Stablecoins, which are pegged to fiat currencies by design, can be used to carry out transactions including remittances, payments, and trading. Although they are on the blockchain like Bitcoin, their values are usually stable, with little fees paid per transaction.
According to a statement by a Director at cNGN, Adedeji Owonibi, the stablecoin is still undergoing a process of approval at the SEC’s regulatory incubation process. While approval may come any time soon, Owonibi added that the stablecoin is now on licensed exchanges in Nigeria, including Quidax and Busha.
Nigeria’s first licensed stablecoin set to undergo approval
According to the developers of the stablecoin, the cNGN is expected to be a pivotal introduction into the Nigerian digital space. They feel that cNGN could help remove the cloud of uncertainty in the industry, showering a wave of regulatory clarity and financial stability in the sector.
The rollout of the stablecoin is scheduled to begin this month, with the developers mentioning that it would be available on partner exchanges and financial institutions across the country. This way, individuals and businesses can be able to leverage the stablecoin to carry out secure, fast, and efficient transactions.
Nigeria has maintained its pace globally in terms of the adoption of digital assets, with the adoption of Tether stablecoin USDT on the rise in the country. This is largely due to the performance of the country’s currency, with most tech-savvy individuals using the stablecoin as a hedge against the falling naira.
While the Nigerian government previously launched the eNaira back in 2021 as a central bank digital currency, the design of the cNGN follows a different model. While the eNaira was created and controlled by the CBN, cNGN is a private stablecoin, operating in a decentralized framework while still being under the country’s regulatory standards.
Digital asset stance and the future of the industry
The Nigerian government has had mixed feelings towards digital assets and the industry, with the legislation in the industry evolving over the years. In February 2021, the CBN announced a ban on cryptocurrency transactions, mandating financial institutions not to offer custody services to platforms and report such transactions. The premier bank cited several concerns related to fraud, money laundering, and financial instability.
The order caused a rise in the use of the peer-to-peer (P2P) system of transactions, with some exchanges making the shift. However, things changed for the sector in December 2023, when the CBN announced the reversal of the order, allowing banks to offer services to licensed digital assets platforms. The move signaled a positive approach to the industry, but things did not change for the users.
Meanwhile, the SEC, which had been pro-crypto for a while, introduced its incubation program to help oversee regulations for crypto projects like cNGN to ensure they are in line with the regulations of the industry. The cNGN is expected to be tied to the naira, offering a way to make crypto remittances without the need for volatile assets. Businesses, on the other hand, stand to gain, leveraging lower transaction fees, quicker settlements, and financial inclusion.
Founder of the Blockchain Nigeria User Group Chimezie Chuta mentioned that cNGN will allow the Nigerian populace to integrate into the industry while helping to push the country’s currency into decentralized finance. “cNGN will help onboard the unbanked population, thereby achieving greater financial inclusion. It will also enable businesses to integrate with crypto firms that support cNGN as a currency rather than relying solely on traditional payment channels,” Chuta said.
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