Nigeria’s CBN Tightens Crypto Licensing and Bans Algorithmic Stablecoins

Nigeria’s Central Bank of Nigeria (CBN) has issued the Regulations for the Operations of Non-Security Virtual Assets, establishing licensing, reserve and capital requirements for stablecoin issuers, cryptocurrency payment providers, exchanges, custodians and other covered companies. The regulations took effect immediately, while existing operators have 180 days to apply for licenses or authorizations. The CBN says the framework is intended to support responsible innovation while protecting consumers and financial stability. It follows President Bola Tinubu’s July executive order, which sought to coordinate crypto oversight among Nigerian authorities without changing their existing powers.

Stablecoin issuers must fully back their tokens with eligible reserve assets and maintain an additional buffer worth at least 2% of their token value. At least 40% of reserves must consist of cash or qualifying highly liquid assets. Minimum paid-up capital is set at 10 billion naira ($7.4 million) for naira-backed issuers and 15 billion naira ($11.1 million) for foreign-currency-backed stablecoin issuers. Companies providing crypto payment services, including exchange and custody operations, must maintain paid-up capital of at least 1 billion naira ($742,000). The regulations also prohibit stablecoins that rely primarily on algorithms rather than eligible reserves to maintain their value, along with tokens that lack enforceable redemption rights.

The rules mark a new phase in Nigeria’s already restrictive approach to cryptocurrency activity. The country previously limited banking access for exchanges and sought to restrict peer-to-peer trading using the local currency. Binance drew international attention after discontinuing its Nigerian naira services in March 2024 amid regulatory scrutiny and allegations of currency manipulation. Nigerian authorities also detained Binance executive Tigran Gambaryan for nearly eight months before dropping money-laundering charges against him in October 2024. For businesses operating in one of Africa’s largest crypto markets, the new framework introduces tighter oversight of stablecoin reserves, licensing and capital requirements.