Nigeria: Mandatory license for stablecoins, algorithmic models banned

Stablecoins licensed in Nigeria. The Central Bank of Nigeria (CBN) imposes a new framework on issuers of stablecoins and providers using digital assets for payments. Entered into force on November 5, 2026, the system also concerns foreign companies which target Nigerian users, even without a physical presence in the country.

Operators already active have 180 days to submit an application for approval. However, their continued activity during this period depends on several immediate obligations.

Key Points

Two categories of licenses distinguish stablecoins backed by the naira from those referenced to a foreign currency.

Foreign currency stablecoins must pass through an issuer incorporated in Nigeria and licensed locally.

The CBN prohibits algorithmic stablecoins and those primarily collateralized by other cryptoassets.

Existing players must register within 30 days and submit their complete application within 180 days.

Foreign stablecoins subject to Nigerian approval

In its official regulations, the CBN distinguishes between stablecoins referenced on the naira, Class 1, and those backed by a foreign currency, Class 2. For this second category, it requires a company incorporated in Nigeria and holder of a Foreign Currency Issuer License.

An approval obtained abroad or a simple partnership with a Nigerian intermediary is therefore not enough. In addition, each token must receive a separate written authorization, which covers in particular its reference currency, its reserves, its name and the blockchains used.

The device goes beyond just emission. It also regulates the distribution, exchanges, custody, transfers and payment services falling under the mandate of the central bank. A company established abroad falls within its scope when it directs these activities towards Nigerian users.

Service providers must also identify their customers, monitor sanctions and monitor transactions. The Travel Rule requires them, under applicable conditions, to transmit information on the sender and beneficiary of transfers.

Bans and a conditional transition

The CBN prohibits stablecoins whose stability relies primarily on algorithmic adjustments of supply or demand rather than eligible reserves. It also excludes tokens referenced to a traditional currency but essentially guaranteed by other cryptoassets.

Another requirement: holders must have a right of reimbursement at the legally enforceable reference value. Presenting a token as stable is therefore not enough to authorize its marketing.

Furthermore, the 180-day period does not constitute a general exemption. To continue their activities at their existing scale, operators must notably register with the CBN within 30 days, immediately comply with anti-money laundering obligations and begin their prudential declarations within 60 days, unless earlier due.

Finally, the text maintains the powers of the Nigerian SEC over financial securities and capital markets. A company active in both areas must obtain the corresponding authorizations.