The Central Bank of Nigeria (CBN) has introduced new regulations requiring foreign-currency stablecoin issuers to obtain local licences and establish Nigerian-incorporated entities, as it moves to tighten oversight of dollar-backed digital tokens and other virtual asset activities.

The regulations, which took effect on November 5, 2026, establish a formal framework for stablecoins, virtual asset service providers and related payment activities, including peer-to-peer (P2P) transactions, custody, transfers and settlement.

In a circular dated November 5, 2026, addressed to virtual asset service providers and stakeholders in the financial services industry, the apex bank said the framework was designed to promote responsible innovation while protecting the integrity of the financial system.

Signed by the Director, Payments System Policy Department, Musa Jimoh, the regulations establish a risk-based framework covering licensing, authorisation, capital requirements, consumer protection, technology risks, cybersecurity, anti-money laundering controls and regulatory reporting.

The rules apply to persons conducting regulated activities in or from Nigeria, targeting Nigerian users or undertaking activities that could materially affect the country’s payments system, financial system, foreign exchange market or financial stability. They may apply even where an operator has no physical presence in Nigeria.

A major provision requires foreign-currency stablecoin issuers to operate through Nigerian-incorporated entities and obtain CBN approval before making their tokens available to Nigerians.

Under Section 11.1, foreign issuers can no longer rely solely on licences or regulatory approvals obtained in other jurisdictions to access the Nigerian market. They must obtain a Class 2 Foreign Currency Issuer Licence and issue their tokens through a locally incorporated entity.

The regulations further require Nigerian entities to remain fully responsible for compliance, even where they operate through international group arrangements. The CBN will have unrestricted supervisory access to their books, records, systems, reserve arrangements and relevant group information.

The framework also introduces capital requirements based on the currency to which a stablecoin is linked. Issuers of naira-referenced stablecoins, classified as Class 1, must maintain minimum paid-up capital of N10 billion, while foreign-currency stablecoin issuers under Class 2 must maintain at least N15 billion.

Other non-security virtual asset service providers face a minimum capital requirement of ₦1 billion.

The CBN is also introducing a systemic stablecoin category, enabling it to impose enhanced supervisory requirements on tokens whose scale or adoption could have wider implications for the Nigerian financial system.

Under Section 3.6, a stablecoin may qualify for systemic designation if its naira-equivalent circulating supply exceeds N500 billion every day for 30 consecutive days, or if it is held or used by more than five million people in Nigeria.

The apex bank may also consider transaction volumes and values, the number and concentration of Nigerian users or wallet addresses, and the proportion of a stablecoin’s activity attributable to the Nigerian market.

The regulations also bring P2P transactions involving dollar-backed stablecoins under the formal foreign exchange framework, requiring providers to obtain express CBN approval before facilitating conversions between the naira and foreign-currency value.

The bank made clear that approval to provide P2P services does not confer permission to conduct foreign exchange business or create an alternative foreign exchange market.

Providers must secure separate approval before facilitating P2P transactions involving conversions between the naira and a Class 2 stablecoin or other foreign-currency value. Such approval will require the naira leg of the transaction to be settled through, or reported to, an authorised dealer designated by the CBN. Transactions must also comply with prescribed foreign exchange monitoring, limits and documentation requirements.

The rules further prohibit operators from structuring, splitting or routing transactions through multiple channels to evade regulatory oversight, foreign exchange or capital-flow requirements, transaction limits, anti-money laundering controls and reporting obligations.

On reserve requirements, Class 1 stablecoin issuers must maintain at least 20 per cent of their total reserve pool as a cash deposit with the CBN in a dedicated Reserve Deposit Account.

The funds cannot be withdrawn without the bank’s prior written consent. The CBN will have real-time visibility over the account, which will not attract interest. The requirement does not apply to Class 2 issuers, whose operational liquidity is governed by separate provisions.

The regulations also prohibit stablecoin issuers from paying interest, yields, dividends or other financial benefits to holders simply for retaining their tokens. They clarify that stablecoins are not bank deposits and are not covered by deposit insurance from the Nigeria Deposit Insurance Corporation.

The CBN has backed the framework with financial penalties for non-compliance. Unlicensed virtual asset activities attract a minimum fine of N100 million, with an additional N1 million for every day the violation continues.

Breaches involving capital, reserve and liquidity requirements may attract penalties ranging from N50 million to N250 million, while violations relating to reserve leverage or encumbrance carry fines of between N250 million and N500 million.

Non-compliance with anti-money laundering, counter-terrorism financing and Travel Rule requirements attracts a minimum penalty of N50 million. Fraudulent conduct or deliberate misrepresentation carries a minimum fine of N500 million, alongside possible referral for criminal prosecution.

The CBN, however, clarified that the regulations do not displace the statutory mandate of the Securities and Exchange Commission. Activities involving security virtual assets, securities, investment contracts and other capital-market products will remain subject to the applicable capital-market regulatory framework.

Nume Ekeghe

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