Nigerian central bank moves to regulate Stablecoins and ICOs

The Central Bank of Nigeria (CBN) said it would develop a regulatory framework to recognize stablecoins and initial coin offerings as an investment class.

The central bank said in its “Payment System Vision 2025” report that private stablecoins have evolved to become a successful payment mechanism in the country, hence the need to regulate their operations.

The regulator added that it would work with relevant authorities to develop a regulatory framework for a possible implementation of stablecoin offerings.

Furthermore, the central bank said it will work jointly with the Nigeria Securities and Exchange Commission (SEC) to regulate initial coin offering (ICO)-based investment solutions.

According to the apex bank, ICOs if properly regulated could serve as a new approach for startups to crowdfund and raise funds for their projects. Additionally, ICOs would be recognized as an investment instrument, which can boast the country’s foreign direct investment.

The CBN said it will continue to support innovations built on distributed ledger technology (DLT), as it considers it a potential enabler for transformation in the Nigerian economy.

Nigeria becoming pro-crypto

Recent development in Nigeria shows that the government was gradually moving from being hard on crypto investors to advocating for pro-crypto measures.

About a year ago, crypto investors in Nigeria were locked out of their bank accounts, following the CBN’s order to close all accounts suspected to have traded cryptocurrency.

Notwithstanding, Nigerians have been undeterred in their love for crypto, as over 26% were reported to hold at least one crypto asset in 2022. In addition, Nigeria was recognized as the number one country in Africa spearheading Bitcoin adoption.

Meanwhile, the government-backed CBDC ‘e-Naira’ recorded an adoption rate of 0.5%, which is considered very low for the 14-month-old project.

However, Nigerian lawmaker Babangida Ibrahim has disclosed that the SEC was set to recognize cryptocurrencies as an investment class.