When the Central Financial institution of Nigeria (CBN) launched the eNaira again in 2021, not many outdoors of the apex financial institution thought it was a recreation changer.
But, it was a landmark initiative that positioned Nigeria on the worldwide map as one of many first movers in central financial institution digital currencies (CBDCs).
Sadly, its promise was shortly overshadowed by politics.
The then CBN Governor’s botched naira redesign coverage in 2022 was seen as an try to intrude in elections, and since then, the eNaira has been left to languish.
At the moment, with a brand new CBN Governor much less eager on CBDCs, the venture is extensively seen as a failure.
However a lot has modified since then. A brand new, extra progressive Securities and Trade Fee (SEC) has emerged, one that’s bullish on digital property.
The brand new SEC Act of 2025 explicitly contains provisions for cryptocurrencies, exchanges, and associated service suppliers. For the primary time, Nigeria is once more on the frontier of digital asset regulation in Africa, following the identical daring footsteps it took with the eNaira.
This brings me to stablecoins, some of the important constructing blocks of the cryptocurrency ecosystem. Globally, stablecoins operate because the bridge between fiat cash and the digital economic system, offering the liquidity that makes crypto markets work.
In accordance with Tether, the world’s largest stablecoin, there are actually over $169 billions of stablecoins in circulation, serving greater than 500 million customers worldwide. Nigeria, as Africa’s crypto capital and a high 10 crypto nation globally, contributes considerably to this demand.
But, what’s usually ignored is how Tether makes cash. Tether pegs its token 1:1 to the U.S. greenback by investing buyer deposits into U.S. Treasuries. The end result? An enormous windfall.
Tether is now one of many high 20 holders of U.S. authorities debt and earned greater than $13 billion in income in 2023 alone. In different phrases, American taxpayers not directly profit from world demand for stablecoins as a result of issuers channel billions into U.S. debt markets.
This could make Nigeria sit up. Having a stablecoin pegged to the naira won’t be as simple as Tether, however the benefits are immense.
A Nigerian stablecoin may change this dynamic.
- If issuers again the tokens with Treasury payments and bonds, it might create a brand new pool of demand for presidency securities, reducing borrowing prices and deepening the home debt market. It will additionally make remittances cheaper.
- Nigerians overseas ship house over $20 billion yearly, and a naira stablecoin may reduce charges, velocity up transfers, and hold worth inside the native system as an alternative of routing via {dollars} or third events.
- With only a smartphone, anybody may save, switch, or transact in digital naira, bypassing banking limitations and lengthening monetary inclusion.
- Past this, stablecoins match seamlessly into fintech apps, e-commerce, and cell funds, sparking new innovation in retail transactions and micro-investing.
Nonetheless, there are severe dangers. The naira’s historical past of sharp devaluations may set off redemption runs, making it tough to carry the peg. Reserves invested in Nigerian authorities securities are much less liquid than U.S.
- Treasuries, creating exit dangers. If funds are saved with native banks, their very own liquidity issues may compromise redemption.
- Coverage unpredictability additionally looms giant, CBN’s historical past of sudden restrictions may harm belief in a single day.
- And eventually, Nigerians might merely want dollar-backed cash like USDT or USDC to guard in opposition to inflation, leaving demand for a naira coin skinny.
But regardless of these dangers, the advantages far outweigh the downsides.
A well-designed, clear, and controlled stablecoin may inject liquidity into authorities debt markets, decrease the price of remittances, broaden entry to finance, and make Nigeria much less depending on foreign-backed digital {dollars}.
The dangers are actual however manageable with clear guidelines, common audits, and credible reserve administration.
Nigeria already has a primary try in cNGN, launched by the African Stablecoin Consortium in partnership with native fintechs and banks. It’s pegged one to 1 with the naira and backed by deposits and authorities securities.
Adoption, nevertheless, stays very small. With a circulating provide of solely about 15 million tokens and a market capitalization of roughly $10,000, it’s a rounding error beside Tether’s $169 billion.
But the symbolic significance can’t be ignored. It exhibits Nigeria can construct, regulate, and challenge its personal stablecoin. The subsequent check is whether or not it may scale, appeal to liquidity, present full reserve transparency, and earn the belief of on a regular basis customers.
