The Central Bank of Nigeria (CBN) has granted approval to the Africa Stablecoin Consortium (ASC) to initiate the pilot phase for its cNGN stablecoin within the regulatory sandbox. The slated launch date for the new stablecoin is Feb. 27, 2024.
In a recent blog post, the ASC, comprising Nigerian banks and fintech operators, asserted that the cNGN stablecoin adheres to the regulatory requirements and standards established by the CBN, the Nigerian Securities and Exchange Commission, and the Nigerian Financial Intelligence Unit. The consortium is actively engaging with regulators to ensure compliance, prioritize consumer protection, and uphold transparency.
cNGN’s Complementary Role to eNaira
The cNGN stablecoin is positioned as a complement, not a replacement, for the eNaira—CBN’s central bank digital currency (CBDC). Unlike the broader capabilities of the eNaira, the ASC oversees the cNGN. Currently interoperable with blockchains like Bantu and BNB Smart Chain, the stablecoin has plans to extend compatibility to all major blockchain networks in the near future.
As per the blog post, the cNGN token maintains a 1:1 peg to the Nigerian naira, the country’s fiat currency, and is backed by Naira reserves held in designated commercial banks. The stablecoin’s primary goal is to bridge the gap between the naira and digital currencies on the global market through the utilization of blockchain technology.
Facilitating International Transactions
The cNGN aims to facilitate Nigerians abroad in sending money to their families in Nigeria without the delays associated with traditional remittances. Additionally, it targets the reduction of expensive fees linked to conventional international transactions.
In alignment with the growing global demand for and adoption of cryptocurrencies, the CBN expressed its desire for the financial system to actively support and facilitate blockchain technology. This sentiment was formalized in a circular issued to banks on Dec. 22, 2023, wherein the CBN lifted restrictions on Nigerian banks, allowing them to facilitate cryptocurrency transactions.
