As one of the world’s pioneers in adopting its own central bank digital currency (CBDC), Nigeria also declares its willingness to accept the existence of private stablecoins. The need to create a legal framework for stablecoins is noted in the latest central bank strategy paper.
Published under the title “Nigeria Payments System Vision 2025,” the 83-page report from the Central Bank of Nigeria (CBN) considers the development of a regulatory framework for the potential use of stablecoins. The document outlines the need to develop a framework as stablecoins are likely to become a successful payment mechanism in the country.
The report also pays attention to the regulation of initial coin offerings (ICOs). The current absence of regulation in the area stands out, causing losses for investors. However, CBN sees potential to embrace ICOs as a new approach to raising funds for capital projects, peer-to-peer lending, and crowdfunding. Therefore, a regulatory framework “in case of adoption of an ICO-based investment solution” is also needed.
Related: Nigeria Prepares to Pass Bill Recognizing Bitcoin and Cryptocurrencies
However, the stablecoin and ICO segment of the report is much smaller than the one dedicated to eNaira, Nigeria’s CBDC. The Central Bank considers it a potential “facilitator of transformation” in the national economy. It is expected to achieve a definitive implementation of the currency in 3 to 5 years.
In December 2022, Nigeria reduced the amount of cash that individuals and businesses can withdraw to $225 and $1,125 per week, respectively, in an attempt to push its “Cashless Nigeria” policy and increase the use of eNaira.
As Cointelegraph reported, eNaira adoption rates have been low since its launch in late 2021, with less than 0.5% of the population using it as of October 25, 2022. The government has struggled to convince Nigerian citizens to use CBDC. despite Chainalysis identifying the country as the top country in Africa for cryptocurrency adoption and ranked 11th globally.