Nigeria's central bank introduces stablecoin licensing rules, bans algorithmic versions

The Central Bank of Nigeria has introduced new licensing requirements for stablecoin issuers and other non-security virtual asset service providers, according to regulations that took effect on Thursday.

According to a circular issued to relevant stakeholders, the regulations establish separate licensing categories for naira-referenced and foreign-currency-referenced stablecoins. Issuers must also secure approval for each token before beginning issuance.

The central bank said the rules cover activities carried out in Nigeria or affecting the country's payments system, financial sector, or foreign exchange market, even if the operator has no physical presence in the country.

Foreign issuers face local requirements

Under the framework, foreign-currency stablecoins can only be offered, distributed, exchanged, or otherwise made available to Nigerians as Class 2 tokens issued through a Nigerian-incorporated entity holding a Foreign Currency Issuer Licence.

The CBN also requires issuers to obtain written approval for each token, covering its classification, reference currency, reserve arrangements, name, ticker, and supported blockchain networks, per the circular. 

The rules also enforce compliance with anti-money laundering and counter-terrorist financing obligations. Entities must implement customer due diligence, sanctions screening, transaction monitoring, and Travel Rule compliance across all custodial wallets, peer-to-peer services, and remittance channels.

Meanwhile, some tokens are prohibited under the rules, including algorithmic stablecoins. The central bank said the ban covers tokens that rely primarily on market dynamics, rather than eligible reserve assets, to maintain their value.

The framework gives the CBN authority over stablecoins and virtual assets used for payments, transfers, remittances, foreign exchange, and settlement. The Securities and Exchange Commission retains oversight of securities and capital-market activities.

Companies operating across both areas must obtain the relevant approvals from each regulator. The regulations took effect on Nov. 5, 2026, with existing operators given 180 days to apply for the appropriate licence or authorization, subject to transitional requirements.