Nigeria’s Central Bank Approves the Launch of cNGN Stablecoin in February
The Africa Stablecoin Consortium confirmed cNGN adheres to the benchmarks set by the Nigerian SEC and the Central Bank of Nigeria. The upcoming stablecoin is scheduled for release on February 27, 2024.
The cNGN Stablecoin Initiative
In a published blog entry, the ASC, a partnership between fintech entities and Nigerian bank, expressed that cNGN follows the guidelines and criteria established by the Nigerian Financial Intelligence Unit of the CBN, and the Nigerian Securities and Exchange Commission.
The consortium mentioned that it is actively communicating with the regulatory authorities to guarantee conformity, safeguard consumer interests, and maintain transparency.
cNGN’s Role in Nigeria’s Blockchain Revolution
The cNGN complements the eNaira but doesn’t replace it. In contrast, to the eNaira, managed by the CBN, the cNGN is overseen by the ASC. It’s currently interoperable with BNB Smart Chain and Bantu, with plans to expand compatibility to major blockchain networks soon.
As stated in the blog post, the cNGN token is tethered at a 1:1 ratio to the fiat currency of the country I.e. the Nigerian naira, and its value is supported by Naira reserves kept in specified commercial banks. The primary goal of the stablecoin is to narrow the divide between the naira and digital currencies in the global market by leveraging blockchain technology.
The objective of the cNGN is to facilitate Nigerians residing abroad in sending funds to their families in Nigeria promptly, bypassing the delays often encountered with remittance processes. Additionally, it seeks to eradicate the high fees linked to conventional international transactions.
At the moment, cNGN is compatible with the Bantu network and BNB Smart Chain, with plans for future integration into prominent blockchains such as Tron and Ethereum in the upcoming months.
As per the blog post, the Central Bank of Nigeria (CBN) expresses its desire for the financial system to endorse and enable the use of blockchain technology. Through a circular distributed to banks on December 22, 2023, the CBN acknowledged the growing worldwide interest in and uptake of cryptocurrency and removed limitations on Nigerian banks assisting in crypto transactions.
The Impact of Crypto on Nigeria’s Economic Landscape
However, it’s difficult to imagine the Naira serving as a stable base currency peg for a stablecoin due to its notable volatility and ongoing devaluation compared to more stable currencies. Yet, it’s premature to predict whether the cNGN will experience a fate similar to that of the eNaira.
Despite the economic difficulties and challenges encountered by Nigeria in 2023, there remains hope that the year 2024 will bring relief. This optimism is fueled by the continuous economic reforms initiated by the federal government, currency control measures, and other interventions by CBN,
At present, Nigeria has taken the forefront in regulating cryptocurrency in Africa. Nevertheless, there are lingering uncertainties regarding the implications of the Central Bank of Nigeria’s stringent (KYC) and (AML) regulations on individuals and businesses within the ecosystem.
This comes in light of the guidelines recently issued by the CBN, raising questions about their impact on innovation and the overall ecosystem.
Nevertheless, these changes are expected to have an enduring effect on the Nigerian economy, particularly with the influx of capital from both local and international investors. Nevertheless, these changes are expected to have an enduring effect on the Nigerian economy, particularly with the influx of capital from both local and international investors.
