Nigeria’s Central Bank (CBN) rolled out a comprehensive stablecoin licensing framework on November 5, 2026, explicitly prohibiting algorithmic stablecoins and fiat‑referenced tokens that rely primarily on cryptocurrency reserves. The new rules impose capital, reserve and redemption requirements for entities issuing stablecoins to Nigerian users, marking a decisive regulatory step for the country’s burgeoning digital asset market.

Algorithmic Tokens and Crypto‑Backed Fiat Tokens Prohibited

According to CoinCentral, Section 2.2 of the CBN’s regulations bars stablecoins whose stability is maintained chiefly through algorithmic supply adjustments. The ban also extends to fiat‑pegged tokens that are primarily backed by crypto assets, as well as sanctioned or non‑redeemable tokens. This move targets products that lack enforceable par‑redemption rights, aiming to protect retail participants from price volatility and systemic risk.

Capital and Reserve Requirements for Issuers

The framework splits permissible stablecoins into two classes. Class 1 tokens, which track the Nigerian naira, must be fully backed by eligible naira assets and their issuers must maintain a minimum paid‑up capital of ₦10 billion. Class 2 tokens, referencing foreign currencies such as the U.S. dollar, require at least ₦15 billion in paid‑up capital and must be issued by locally incorporated entities. All licensed issuers are required to keep reserves covering 100% of outstanding stablecoin obligations, with at least 40% of the reserve pool in cash or high‑quality liquid assets and a separate 2% collateral buffer. Naira‑linked issuers must also deposit 20% of their reserves directly with the CBN, which does not count toward the 40% liquidity requirement.

Transition Period and Compliance Obligations

Existing operators have a 30‑day window to register with the CBN and must begin supervisory reporting within 60 days, unless the regulator demands earlier submission. Full licensing applications are due within 180 days. During this transition, firms may continue operating at their current scale but must adhere to anti‑money‑laundering and counter‑terrorist‑financing rules from the start. The CBN also extends licensing oversight to wallet providers, custodians, payment gateways and peer‑to‑peer platforms, requiring appropriate approvals for each regulated activity.

What to Watch Next

Stakeholders will monitor how quickly domestic and foreign stablecoin projects adjust to the capital thresholds and reserve mandates, and whether any entities seek the limited exemption for wholesale cross‑border settlements. Market observers will also watch for CBN enforcement actions and any further guidance on the treatment of existing crypto‑backed tokens under the new regime.