What cNGN, Nigeria’s stablecoin, means for crypto adoption

Nigeria is set to welcome its first fully compliant stablecoin, cNGN, licensed by both the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).

Stablecoins are digital currencies designed to maintain a fixed value, making them practical for payments, remittances, and trading. Unlike traditional cryptocurrencies like Bitcoin, which experience drastic price fluctuations, stablecoins operate with stability, ensuring swift and low-cost transactions via blockchain technology.

Adedeji Owonibi, founder of Convexity and Director at cNGN, stated that the stablecoin is currently undergoing the SEC’s regulatory incubation process to secure full government approval. He also noted that cNGN is now available on licensed Nigerian digital asset exchanges, including Busha and Quidax.

According to the company, the introduction of cNGN is expected to enhance regulatory clarity and financial stability within Nigeria’s digital economy. The rollout, set to begin in February, will extend the stablecoin’s reach to partner exchanges and financial institutions, providing businesses and individuals with a secure and efficient digital transaction tool.

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Nigeria remains one of the leading nations in cryptocurrency adoption, particularly for stablecoins like USDT, driven largely by the persistent depreciation of the naira against the dollar.

While the Nigerian government previously launched the eNaira in 2021 as a central bank digital currency (CBDC), cNGN follows a different model. Unlike the eNaira, which is issued and controlled by the CBN, cNGN is a privately managed stablecoin that operates within a decentralised financial framework while adhering to regulatory standards.

The government’s stance on digital assets has evolved over the years. In February 2021, the CBN banned cryptocurrency transactions through banks, citing concerns about fraud, money laundering, and financial instability. This led to increased reliance on peer-to-peer (P2P) trading. However, in December 2023, the CBN reversed this position, allowing banks to provide services to licensed digital asset firms, signalling a more progressive regulatory approach.

Meanwhile, the SEC has introduced an incubation program to oversee regulatory compliance for digital asset initiatives like cNGN and ensure their alignment with financial regulations.

For the average Nigerian, cNGN provides a more accessible entry point into digital finance. Its stable value tied to the naira makes it a reliable alternative to highly volatile cryptocurrencies, offering benefits such as smoother remittances, seamless online transactions, and investment opportunities.

On the other hand, businesses stand to gain from quicker payment settlements, lower transaction fees and enhanced financial inclusion. cNGN could support a more seamless financial ecosystem by reducing inefficiencies in traditional banking processes.

Chimezie Chuta, founder of the Blockchain Nigeria User Group, emphasised that cNGN’s launch presents an opportunity to integrate Nigeria’s currency into decentralised 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,” he said.

He added, “With cNGN already regulated by the SEC and authorised by the CBN, the burden of regulatory compliance has been lifted off end users, integrators, and developers.”