A consortium of Nigerian banks, fintechs and blockchain companies is developing the first regulated Naira stablecoin, cNGN.
The new stablecoin cNGN will be a consortium-based compliant and regulated Naira stablecoin. cNGN will be pegged 1:1 to NGN, but unlike previous stablecoin drafts, it will be owned by Nigerian banks and will be legal tender.
According to Forbes sources, the launch is planned for 2024.
Unlike previous versions, cNGN will be a cryptocurrency — like other stablecoins — and not a CBDC. Also, the coin will be serviced by the consortium and owned by its banks.
“Nevertheless, there are still many unknowns about the cNGN that will need to be clarified by the consortium, such as the blockchain it will use and the planned apps and services for consumers.”
It is noteworthy that just a day ago, transactions with cryptocurrencies were allowed in Nigeria. Previous rules introduced by the country’s Central Bank in February 2021 prohibited credit institutions from conducting cryptocurrency-related transactions. The lifting of the ban stems from the understanding that cryptocurrencies play an important role in global financial systems and their use in Nigeria is inevitable.
Nigeria has already made several attempts to transition to a digital currency. In 2012, Nigeria introduced its cashless policy on the premise that moving away from cash would make its payment system more efficient, reduce the cost of banking services, and improve the effectiveness of monetary policy.
However, the adoption rate of cNGN’s predecessor, a CBDC called eNaira, has been low since its launch on Oct. 25, 2021, despite nearly 40 million people in the country needing a bank account. Nigeria’s central bank has struggled to convince citizens to use CBDC, but the digital currency has attracted only one in 200 citizens.