The Central Bank of Nigeria (CBN) has granted the Africa Stablecoin Consortium (ASC) permission to test its cNGN stablecoin in the regulatory sandbox.
The launch is slated for February 27, 2024. The CBN, the Nigerian Securities and Exchange Commission, and the Nigerian Financial Intelligence Unit have set regulatory standards and requirements, and the cNGN stablecoin satisfies them, according to a blog post published on January 4 by the ASC, which is made up of a collaboration between Nigerian banks and fintech companies.
To preserve compliance, protect the interests of consumers, and preserve operational transparency, the group further underlined their continued involvement with these regulatory organizations.
The purpose of the cNGN is to supplement the eNaira, the Central Bank Digital Currency (CBDC) that the CBN has released, rather than to replace it. The ASC manages the cNGN, in contrast to the CBN, which established the eNaira with more powers.
There are plans to increase the stablecoin’s interoperability across key blockchain networks. Currently, it is compatible with strategic blockchains like Bantu and BNB Smart Chain.
With a 1:1 peg to the Nigerian naira, the cNGN token seeks to enable smooth transactions between the naira and other digital currencies worldwide. Naira reserves held in specific commercial banks serve as its backing.
With its affordable alternative to conventional transfer methods, the stablecoin is positioned to facilitate international transactions for Nigerians residing overseas.
The program is in line with the CBN’s updated position on cryptocurrencies. In recognition of the expanding worldwide trend and the unavoidable integration of cryptocurrencies into Nigeria’s financial environment, a Dec. 22, 2023 circular announced lifting the 2021 prohibition on Nigerian banks’ participation in cryptocurrency transactions.
Nigeria transitioned to digital currency in 2012 when a cashless policy was implemented. By minimizing the use of cash for transactions, the program sought to improve payment system efficiency, reduce banking service costs, and increase the efficacy of monetary policy.
Despite the fact that around 40 million individuals in the nation require a bank account, the adoption rate of CBDC eNaira, the forerunner of cNGN, has been poor since its inception on October 25, 2021. Only one in 200 Nigerians have adopted the digital currency, CBDC, despite the central bank’s best efforts to persuade the populace to do so.
