Nigeria’s Central Bank Approves Introduction Of cNGN Stablecoin Despite CBDC Concerns
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Nigeria’s Central Bank has authorized the Africa Stablecoin Consortium (ASC) to launch the Nigerian Naira stablecoin as part of its regulatory sandbox.
This underscores a significant moment in the financial landscape of Nigeria. The blockchain experts in the country, fintech innovators comprising leading financial institutions, and the ASC shift their attention towards monetary transactions.
Scheduled to launch on February 27, 2024, the Nigerian Naira stablecoin (cNGN) is backed on a 1:1 basis by Naira reserves held in specific commercial banks.
The ASC mentioned in its official announcement that it is expected to increase the influence of the Naira worldwide, offering fast and profitable transactions on a global level.
As per the ASC, the launch of cNGN will improve Nigeria’s payment platforms, enabling progress in using the regulatory framework for the Central Bank Digital Currency’s (CBDC) and open banking.
The stablecoin aims to build a robust financial system for the future, using technology to enhance security and streamline transactions. The ASC foresees a future where cryptocurrencies work hand in hand with conventional finance, building an inclusive and robust financial environment.
Despite initial advancements, Nigeria has faced continuous challenges in the widespread adoption of its CBDC the eNaira. Last year, the country revealed its plans to change the eNaira model to increase its usage.
Nigeria’s digital finance landscape is still low
Many Nigerians need more awareness to use the eNaira digital currency. Even though the central bank reported transactions worth 22 billion Naira (around $48 million) in March last year, there are problems because many people prefer using cash. This is mainly because of the country’s widespread informal economy.
Nigeria has previously taken an active approach to overseeing cryptocurrencies transactions. Last year, the country’s Securities and Exchange Commission (SEC) repeated its warning about Binance, saying that its operations in Nigeria are “against the law.”
The regulator highlighted that Binance’s activities in Nigeria are not regulated or registered by the commission, considering them unlawful.
This caution applies to all cryptocurrency platforms in the country, with a solid request to stop soliciting Nigerian investors immediately.
Nigeria’s Central Bank Cautions Against Cryptocurrency Platforms
The Nigerian SEC warned people not to get involved with businesses that are not officially registered, as it wants to prevent the dangers of investing in cryptocurrencies that could result in losing money.
Nigeria’s approval of the cNGN stablecoin by the Central Bank also marks a significant step towards globalizing the Naira. Despite challenges with the adoption of eNaira, the cNGN presents a promising alternative.
Regulatory caution towards crypto platforms, like Binance, underscores the need for careful investment, emphasizing the risks associated with unregistered entities in the crypto space.
