The Central Bank of Nigeria (CBN), in its recently released payments system document, stated that it would be open to creating a regulatory framework for potential stablecoin implementations. According to the document, such stablecoin implementations “are likely to be successful payment mechanisms,” so it is necessary to create a regulatory framework.
The CBN’s Nigeria Payments System Vision 2020 document discusses stablecoin implementations and also the creation of a regulatory framework for initial coin offerings (ICOs). Although acknowledging the importance of ICOs, the document stated that regulation was necessary if investors are to revive interest in this type of fundraising.
ICOs are not regulated so there is no appetite for them to be adopted. The document states that ICOs are an asset class and there is potential to adopt the technology of ICOs for new fundraising methods. This could include peer-to-peer lending, crowdfunding, or capital projects in the wholesale market.
The document states that ICOs can be used to raise capital and attract foreign direct investment (FDI), once a proper regulatory framework has been in place.
Regulating Initial Coin Offerings
Although the CBN used to discourage or bar financial institutions from facilitating transactions that involved cryptocurrencies in the past, the most recent payments system document indicates that the central bank’s position towards private-issued digital currencies has changed.
Some Nigerian commentators accused CBN of eroding the power of Nigerian Securities and Exchange Commission. The document however, which envisages a cashless economy in 2025, states that the CBN will regulate the digital currency market alongside the NSEC.
The document states that the CBN would play a role in payment, but the SEC would need a regulatory framework, since tokens are a new asset type.
