Stablecoin issuers based abroad can no longer serve Nigerian users on the strength of a foreign license under a new rulebook from the Central Bank of Nigeria (CBN) that took effect Nov. 5.
The CBN published the rulebook for virtual assets that aren’t securities with a circular saying it took effect Thursday, Nov. 5. The rules set out licenses for stablecoin issuers and for the payment, custody, wallet and exchange firms that handle their tokens. Under the rules, stablecoins pegged to the dollar or another foreign currency fall into Class 2, and only a company incorporated in Nigeria and licensed by the CBN for that class may issue them to the Nigerian market. The document says a foreign license “shall not substitute for that licence” or for the CBN’s approval of the token.
“There is no offshore issuer exemption from incorporation, licensing or capital,” Section 15.3 adds.
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Capital and Reserves
Issuers of naira-referenced (Class 1) stablecoins must hold paid-up capital of at least 10 billion naira, while foreign-currency (Class 2) issuers need at least 15 billion naira. Other service providers need 1 billion naira, on top of any capital the Securities and Exchange Commission (SEC) sets for them.
Tokens must be fully backed by reserves, plus a 2% overcollateralization buffer, and Class 1 issuers must keep at least 20% of their reserve pool as a cash deposit at the CBN. Issuers may not pay interest or yield to holders.
The rules also ban algorithmic stablecoins, fiat-referenced tokens backed mainly by other crypto assets, and tokens that give holders no enforceable right to redeem at par. Operating without a license can draw a fine of at least 100 million naira, plus at least 1 million naira for each day the breach continues.
What It Means for Dollar Tokens
The burden also falls on the platforms Nigerians use. Section 6.5 says, “A Licensee shall not make available a stablecoin that has not received Token Approval.” That means a licensee cannot offer a dollar token such as Tether’s USDT until the central bank approves that token as a Class 2 stablecoin and a licensed Class 2 issuer exists to put it out. That issuer can belong to a foreign group, but it must be incorporated in Nigeria and hold its own CBN license. Existing Class 2 arrangements will be assessed against those requirements, and keeping access during that review needs the central bank’s express interim permission.
Transition Period
With the rules in effect since Nov. 5, existing operators have 180 calendar days, until May 4, 2027, to apply for a license. Under Section 54.1, those that want to keep running at their current scale in the meantime must register with the central bank within 30 days, by Dec. 5.
The regulations say they are issued under a 2026 presidential executive order that set up a Virtual Asset Council, and they leave tokens that qualify as securities to the SEC. The CBN told banks to stop facilitating crypto transactions in 2021 before letting them serve licensed providers in December 2023. Nigerian fintech Flutterwave has since partnered with Polygon Labs on a stablecoin payments network covering 34 African countries.
Related Listen: Why Banks Failed to Kill Stablecoin Rewards in the Clarity Act
