A disruptive shift is underway in Nigeria’s financial sector, as a consortium of banks and Fintech companies in Nigeria are gearing up to launch the Compliant Nigerian Naira StableCoin (cNGN) on February 27, 2024.
The launch of the cNGN is coming following the rollout of the recently released regulatory Sandbox by the Central Bank of Nigeria (CBN).
The Nigerian Naira would be pegged 1:1 to the cNGN token and is backed by Naira reserves held in designated commercial banks.
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While noting that the stablecoin will transform the Nigerian Naira into a currency for global settlements, the Africa Stablecoin Consulting (ASC) said:
“This (the cNGN) ushers in a new era of financial fluidity, bridging the Nigerian Naira with the global market through blockchain technology. Backed 1:1 by Naira reserves held in designated commercial banks, the cNGN Stablecoin transforms the Naira into a dynamic tool for worldwide remittances, commerce, trade, and investment.
“More than just a currency, CNGN shortens settlement times, enabling payments that traverse the globe swiftly, mirroring the speed of a text message and at a fraction of the cost. This breakthrough paves the way for instantaneous financial transaction, seamlessly connecting Nigeria’s vibrant economy with international markets and offering unprecedented efficiency in both domestic and global financial interactions.”
A collaboration of Nigerian banks and fintech operators said the NGN stablecoin complies with the regulatory requirements and standards set by the CBN, the Nigerian Securities and Exchange Commission, and the Nigerian Financial Intelligence Unit. The group said it is engaging with the regulators to ensure compliance, consumer protection, and transparency.
The cNGN aims to help Nigerians abroad send money to their families in Nigeria without waiting for remittances to go through. It also aims to eliminate the expensive fees associated with traditional international transactions.
According to the CBN, it wants the financial system to support and facilitate blockchain technology. In a circular sent to banks on Dec. 22, 2023, the CBN recognized the increasing global demand for and adoption of crypto and lifted restrictions on Nigerian banks facilitating cryptocurrency transactions.
To execute the cNGN project, the key partners will include commercial banks like First Bank, Access Bank, Sterling Bank, and Providus Bank; payment infrastructures like Interswitch, Kora (formerly Korapay), and Budpay; and Blockchain consultants like Interstellar (Blockchain infrastructure company) and Convexity (Blockchain consultants).
The launch of a stablecoin in Nigeria no doubt heralds a paradigm shift in financial flexibility, seamlessly connecting the Nigerian Naira to the global financial ecosystem through the utilization of blockchain technology.