Nigeria to Launch Naira-Backed Stablecoin, cNGN

Summary:
• Regulated by the Central Bank of Nigeria and managed by the African Stablecoin Consortium (ASC), cNGN will compliment, not replace the eNaira

Following the approval of the Africa Stablecoin Consortium (ASC) to pilot the cNGN stablecoin in its regulatory sandbox by the Central Bank of Nigeria (CBN), Nigeria is slated to become the first African nation to implement the use of a sovereign stablecoin. The country is set to launch cNGN on February 27, 2024.

As a stablecoin backed 1:1 by Nigerian naira currency reserves in selected commercial banks, cNGN is built to follow the regulations set out by the Central Bank of Nigeria (CBN), the SEC, and the Nigerian Financial Intelligence Unit (NFIU).  Not to be confused with the eNaira, the cNGN stablecoin will have multiple blockchain compatibility, supporting blockchains, including Bantu, BNB Smart Chain, Polygon, Ethereum, and Tron.

Currency conversion and international transfer fees are two of the most time-consuming and expensive aspects of conducting business across borders. The cNGN is built to streamline these processes and more. The project aims to support faster and cheaper international money transfers, simplify trade and commerce, and create new investment opportunities.

Officials hope that the cNGN launch will open up the gates for the Naira to become a more flexible medium of foreign money transfers. In addition, it will facilitate easy and fast cross-border business transactions, which could potentially have an effect on global trade.

How does the cNGN compare with the eNaira?

The eNaira is issued and managed directly by the CBN, and the cNGN is meant to supplement it, not replace it. It has programmability and NFC contactless payment capabilities. Nevertheless, just one out of every 200 Nigerians has signed up for the CBDC eNaira digital currency since its introduction in October 2021.

In contrast, the cNGN will be administered by ASC, a partnership of banks and fintech businesses in Nigeria. Remarkably, on December 22, 2023, the Central Bank of Nigeria (CBN) lifted its ban on cryptocurrency transactions. This effectively means that Nigerian banks and other financial institutions can now create accounts for entities dealing in virtual currencies, provided that these businesses adhere to certain CBN regulations.