In its regulatory sandbox, the Central Bank of Nigeria (CBN) has authorized the Africa Stablecoin Consortium (ASC) to pilot the cNGN stablecoin. The release date for the new stablecoin is February 27, 2024.
The ASC, an association of Nigerian banks and fintech operators, stated in a blog post that the cNGN stablecoin adheres to the standards and regulatory requirements established by the CBN, the Nigerian Securities and Exchange Commission, and the Nigerian Financial Intelligence Unit. The organization stated that it is cooperating with regulators to ensure consumer protection, transparency, and compliance.
The cNGN functions as an adjunct rather than a replacement for the eNaira, the central bank digital currency (CBDC) that the CBN issues. The ASC supervises the cNGN instead of the CBN, which developed the eNaira with more extensive capabilities.
The stablecoin exhibits interoperability with strategic blockchains such as Bantu and BNB Smart Chain. Proximity exists to expand this compatibility to encompass all critical blockchain networks imminently.
The cNGN token is backed by Naira reserves held in designated commercial institutions and is pegged 1:1 to the Nigerian naira, the country’s fiat currency, as stated in the blog post. The stablecoin uses blockchain technology to bridge the divide between the naira and digital currencies on the global market.
The mission of the cNGN is to enable Nigerians living overseas to transfer money to their families in Nigeria without having to wait for remittances to clear. Additionally, it seeks to eradicate the excessive charges that are commonly linked to conventional global transactions.
The CBN desires the financial system to facilitate and support blockchain technology, per the blog post. The CBN, acknowledging the growing worldwide demand for and acceptance of cryptocurrencies, removed limitations on Nigerian banks that facilitate such transactions in a circular distributed to banks on December 22, 2023.