The Central Bank of Nigeria (CBN) approves the Africa Stablecoin Consortium (ASC) to pilot cNGN (a stablecoin pegged to the value of Nigerian Naira) in its innovative Regulatory Sandbox.
The Africa Stablecoin Consortium (ASC) on Jan.4 announced that it received the green light from the Central Bank of Nigeria (CBN) to pilot a new cNGN stablecoin. The digital currency is scheduled to go live on February 27th, 2024.
According to the announcement, cNGN will be tracking the course of the Nigerian Naira, backed 1:1 by Naira reserves held in designated commercial banks. The stablecoin is expected to be leveraged for numerous use cases, including worldwide remittances, commerce, trade and investment.
One of the main perceived benefits of using cNGN is its ability to power instantaneous financial transactions both on a domestic and international scale. Besides, it would enable Nigerian businesses and individual customers to pay in Naira without high international transaction fees and other challenges of currency conversion.
The cNGN stablecoin will be maintained by the ASC, with reserves held by the banks belonging to the consortium.
The Africa Stablecoin Consortium is an alliance of financial institutions, fintech startups, and blockchain experts, including prominent Nigerian tier-1 banks such as First Bank, Access Bank, Sterling Bank, and Providus Bank, payments companies Budpay, Kora (formerly KoraPay), and Interswitch, and Blockchain consultants Convexity and Interstellar.
Unlike e-Naira, cNGN is not a central bank digital currency (CBDC), although the initiative is supported by the country’s central bank. Therefore, the CBN will not have direct control over the new stablecoin, providing only regulatory oversight along with the Nigerian Securities and Exchange Commission (SEC).
The Central Bank of Nigeria officially introduced the “e-Naira” CBDC in October 2021. The bank expects digital currency to bring multiple benefits, including the growth of financial inclusion, facilitating remittances, and reducing the shadow economy.
Despite strong crypto support across the country, Nigerians have been reluctant to use the centralised digital currency, introduced by the government. In July 2023, the Nigerian central bank added the NFC function to the e-Naira payment app to improve the adoption rates for the country’s CBDC.
Before cNGN, Nigeria made a few other attempts to introduce a Naira-backed stablecoin. One of them was NGNT developed by the Token Mint consortium in 2019. That consortium consists of major Nigerian crypto exchanges and African communities, including Helicarrier and Busha. NGNT is pegged 1:1 with the Naira and functions on the Binance Smart Chain and the Ethereum Network, as BEP-20 and ERC-20 tokens, respectively.
