Nigeria is set to make a groundbreaking advancement in the digital financial space with the introduction of its first fully compliant stablecoin, cNGN.

This digital currency is licensed by both the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC), marking a significant step forward for the country’s evolving financial landscape.

What Are Stablecoins?

Stablecoins are digital currencies designed to maintain a stable value, making them practical for payments, remittances, and trading.

Unlike traditional cryptocurrencies such as Bitcoin, which are notorious for drastic price fluctuations, stablecoins provide a level of price stability.

This feature ensures swift, low-cost transactions through blockchain technology, making them a valuable tool for both individuals and businesses.

cNGN: Bridging Stability and Innovation

Adedeji Owonibi, founder of Convexity and Director at cNGN, highlighted that the stablecoin is currently undergoing the SEC’s regulatory incubation process to secure full government approval.

He noted that cNGN is now available on licensed Nigerian digital asset exchanges, including Busha and Quidax.

According to Convexity, the introduction of cNGN is expected to provide regulatory clarity and enhance financial stability within Nigeria’s digital economy.

The rollout, scheduled for February, will extend the stablecoin’s reach to partner exchanges and financial institutions, offering a secure and efficient digital transaction tool.

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Why Is cNGN Important?

Nigeria remains a leader in cryptocurrency adoption, particularly for stablecoins like USDT. This trend is largely driven by the persistent depreciation of the naira against the dollar. The launch of cNGN presents a stable, locally denominated digital currency that can mitigate these currency challenges.

While the Nigerian government previously launched the eNaira in 2021 as a central bank digital currency (CBDC), cNGN operates under a different model.

Unlike the eNaira, which is issued and controlled by the CBN, cNGN is privately managed within a decentralised financial framework while adhering to regulatory standards.

A Shifting Regulatory Landscape

The government’s position on digital assets has evolved significantly. In February 2021, the CBN banned cryptocurrency transactions through banks, citing concerns about fraud, money laundering, and financial instability.

This led to a surge in peer-to-peer (P2P) trading as Nigerians sought alternative means to access digital currencies.

However, in December 2023, the CBN reversed its position, allowing banks to provide services to licensed digital asset firms.

This policy shift indicates a more progressive approach to digital finance. Meanwhile, the SEC has introduced an incubation program to ensure that digital asset initiatives like cNGN comply with financial regulations.

Benefits for Nigerians

For the average Nigerian, cNGN offers a stable entry point into digital finance. With its value tied to the naira, it provides a reliable alternative to highly volatile cryptocurrencies. Key benefits include smoother remittances, seamless online transactions, and investment opportunities.

Businesses, on the other hand, stand to gain from quicker payment settlements, lower transaction fees, and enhanced financial inclusion.

By reducing inefficiencies in traditional banking processes, cNGN has the potential to support a more seamless financial ecosystem.

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Expert Insights

Chimezie Chuta, founder of the Blockchain Nigeria User Group, emphasised the transformative potential of cNGN. “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.”

Looking Ahead

As cNGN rolls out across Nigeria’s financial landscape, its impact is expected to be significant. By bridging traditional finance and decentralised financial models, cNGN is on track to redefine how Nigerians interact with digital currencies.

With the support of regulatory bodies and local digital asset exchanges, cNGN presents a promising future for digital finance in Nigeria.