Nigeria Sets ₦15B Stablecoin Capital Floor, Bans Algorithmic Tokens

Nigeria requires local stablecoin issuers

In its 167-page rulebook, the Central Bank of Nigeria says the framework seeks to support payment innovation while protecting monetary stability, consumers and the financial system. Its scope includes activities directed at Nigerians even when an operator has no physical presence in the country.

Class 1 covers naira-referenced stablecoins and requires ₦10 billion in paid-up capital. Class 2 covers foreign-currency tokens and requires at least ₦15 billion. The bank can prescribe higher amounts, and the requirements continue after entry rather than applying only at the licensing stage.

Section 6.5 requires foreign-currency stablecoins made available to Nigerians to be issued through a Nigerian-incorporated Class 2 licensee. A foreign regulatory approval or arrangement with a Nigerian intermediary does not replace that licence or the token’s separate approval.

That provision is significant for distribution as well as issuance. The wording covers marketing, exchange, custody and redemption, closing off a simple assumption that an offshore issuer can satisfy the rules merely by appointing a local trading partner.

The framework does not name particular overseas tokens as approved or announce that specific issuers have obtained licences. It therefore does not establish the future availability of any individual dollar token. Those questions depend on approvals and implementation, including the transition provisions.

Nigeria’s decision adds a domestic licensing test to a sector pursuing stablecoin payment expansion across Africa. Commercial adoption and regulatory permission are separate milestones: a payment partnership alone does not show that every token or service meets the new framework.

Stablecoin reserves need an extra 2% buffer

Sections 24.1 through 24.4 require continuous one-to-one reserve backing and an additional buffer of at least 2% of circulating tokens’ par value. Issuers cannot mint against expected future receipts; eligible reserve assets must already have arrived.

Capital and reserves answer different questions. Paid-up capital supports the issuing business, while the reserve pool backs token obligations. Treating the ₦15 billion entry requirement as a substitute for backing outstanding coins would misread the framework.

For naira issuers, at least 20% of the total reserve pool must be deposited at the central bank. Section 24.25 expressly excludes Class 2 issuers from that particular requirement; they face separate liquidity provisions. Applying the 20% rule to every dollar-backed issuer would therefore overstate its reach.

Standard redemption must be free and completed at par in the reference currency by the end of the business day following a valid request. During a stress event, the bank may permit a longer period, capped at five business days. Defined suspension grounds also apply.

The distinction between a holder’s redemption right and an exchange’s trading price remains important. A rule requiring repayment at par does not guarantee that every secondary-market transaction occurs at that price or that every request avoids the specified exceptions.

Other jurisdictions are also defining repayment obligations. Canada’s proposed redemption rules address fees and timing, but remain a proposal. Nigeria’s framework should be assessed on its own effective date, approval requirements and exceptions.

Section 13.3 prohibits issuers from paying or facilitating benefits simply for holding or depositing their stablecoins, including through a service provider used to circumvent the ban. The rules also prohibit marketing Class 1 or Class 2 stablecoins as bank deposits covered by Nigerian deposit insurance.

Nigeria gives existing operators 180 days

The prohibited-token list includes algorithmic stablecoins relying primarily on supply or demand adjustments rather than full eligible reserve backing. It also covers fiat-referenced tokens backed wholly or primarily by other virtual assets and purported stablecoins without enforceable par redemption.

Those categories concern token design and backing. The framework separately governs bank-issued deposit money tokens, which correspond to liabilities on a licensed bank’s books. Tokenizing a bank deposit does not automatically turn it into a licensed stablecoin.

Section 54 gives existing operators 180 calendar days from commencement to submit complete applications. Continued activity is limited to existing scale and requires registration within 30 days, compliance with anti-money-laundering obligations from commencement, and supervisory reporting within 60 days or earlier if prescribed.

Existing Class 2 arrangements require express interim permission for continued access during assessment. The application window is consequently conditional, not a blanket exemption for offshore tokens or an invitation to expand before approval.

Broader sentiment remained weak: Alternative.me’s index showed 28, or Fear, against 50 a day earlier when checked November 6 around 18:00 UTC. That measures Bitcoin sentiment rather than Nigerian stablecoin adoption.

The next checkpoints are registration, interim permissions and published licensing decisions. The rulebook does not establish which existing foreign-currency arrangements will secure approval or how quickly individual applications will be resolved.