The Central Bank of Nigeria (CBN) has introduced a N15 billion minimum paid-up capital requirement for foreign-currency stablecoin issuers seeking to operate in Nigeria, tightening regulatory oversight of the country’s growing cryptocurrency market.

The new requirement, equivalent to approximately $11.16 million, applies to foreign companies issuing stablecoins pegged to currencies such as the US dollar, including Tether’s USDT and Circle’s USDC.

Under the regulations released on Thursday, November 5, foreign stablecoin issuers must establish locally incorporated and licensed entities in Nigeria and comply with the country’s capital, reserve and operational requirements to maintain access to the market.

Also Read:

The CBN also prescribed a lower minimum capital requirement of N10 billion, approximately $7.44 million, for issuers of naira-backed stablecoins.

The framework establishes a formal licensing regime for stablecoin operators, bringing digital tokens designed to maintain a fixed value against fiat currencies under more direct regulatory supervision.

Stablecoin Growth in Nigeria

Stablecoins have become increasingly important in Nigeria’s financial technology ecosystem, providing businesses and individuals with alternative channels for cross-border payments, international settlements and access to dollar liquidity.

The regulatory intervention comes amid growing interest from major global stablecoin companies in Nigeria, one of Africa’s largest cryptocurrency markets.

In August, Tether, the El Salvador-based company behind USDT, advertised for an Expansion Manager in Nigeria as part of efforts to strengthen its presence in the country.

Circle, the United States-based issuer of USDC, also appointed Gillian Darko, a former strategy executive at stablecoin infrastructure company Yellow Card, as its Vice President and Head of Africa this week.

The developments reflect the growing importance of African markets to global stablecoin providers, even as regulators seek greater control over how dollar-backed digital assets are distributed and used.

New Guidelines

Under the new framework, foreign-currency stablecoins can only be offered, distributed or made available to Nigerian users through a locally incorporated and licensed issuer.

Foreign regulatory approvals will not exempt international operators from complying with the CBN’s requirements.

Issuers must also maintain adequate reserves backing their tokens, establish mechanisms through which customers can redeem their holdings and submit regular reports to the regulator.

The CBN will require monthly reserve attestations and reserves-related disclosures, while retaining the authority to impose additional capital and liquidity requirements on operators considered to pose risks to financial stability.

Existing operators will have 180 days from the effective date of the regulations to apply for the appropriate licence. However, the CBN has not yet specified when the implementation period will formally begin.

The regulations also require companies to register with the regulator within 30 days and commence supervisory reporting within 60 days.

The CBN warned that operators that fail to meet the requirements within the stipulated period would be required to suspend operations until they obtain the necessary licence or authorisation.

“Failure to submit within that period shall require cessation until the required licence or authorisation is obtained,” the regulator said.

Algorithmic Stablecoins Prohibited

The new regulations also prohibit algorithmic stablecoins, which rely primarily on automated mechanisms and adjustments to token supply to maintain their intended value rather than sufficient reserve backing.

Unlike conventional stablecoins backed by fiat currencies or other assets, including gold, algorithmic stablecoins depend heavily on market incentives and automated mechanisms to maintain their pegs.

The CBN’s restriction reflects concerns about the potential instability of such arrangements and the risks they could pose to users and the broader financial system.