The Central Bank of Nigeria (CBN) stated that it would be open to creating a regulatory framework for potential stablecoin implementations in its recently released payments system document. The document claims that such stablecoin implementations are likely to be a successful payment mechanism, hence there is a need to develop a regulatory framework for such implementation.
The CBN’s Nigeria Payments System Vision 2025 document highlights the development of a framework to govern initial coin offerings (ICOs) in addition to discussing stablecoin deployments. Although the letter acknowledged the potential importance of ICOs, it also stated that regulation is necessary to rekindle investor enthusiasm for this type of fundraising.
The document stated, “There is little appetite to adopt the current round of ICOs given their lack of regulation. However, given the role of ICOs as an asset class, there is potential for adopting the technology of ICOs as a new approach to fundraising for capital projects (in the wholesale market) or peer-to-peer lending or crowdfunding (for the retail market).”
The document also adds that once a properly implemented and supported regulatory framework is in place, ICOs could become a new way to attract foreign direct investment (FDI) and raise capital.
The payments system paper also implies that the CBN’s attitude toward privately produced digital currencies has changed, even though the central bank has in the past discouraged or prohibited financial institutions from supporting transactions that use cryptocurrencies.
After the CBN directed banks to stop extending services to crypto entities in February 2021, some Nigerian commentators accused the central bank of usurping the powers of the Nigerian Securities and Exchange Commission (NSEC). However, according to the document, which envisions a cashless economy by 2025, the CBN and NSEC will jointly regulate the digital currency space.
“The CBN would have a role in the payment aspect, but SEC would need to provide a regulatory framework since the tokens would be a new asset class,” the document states.