Nigeria implements strict crypto licensing framework, outlaws algorithmic stablecoins
The West African nation has outlawed algorithmic stablecoins while implementing reserve mandates for token issuers as part of expanded central bank supervision over cryptocurrency payment operations.
The Central Bank of Nigeria has rolled out comprehensive licensing provisions and reserve mandates for digital currency businesses, strengthening regulatory supervision over stablecoins and virtual asset payment operations in what represents one of the continent's most significant cryptocurrency markets.
On Thursday, the Central Bank of Nigeria (CBN) released the Regulations for the Operations of Non-Security Virtual Assets, creating a regulatory framework for entities involved in stablecoin issuance, cryptocurrency payment services, trading platforms, custody solutions, and additional covered service operators.
The regulatory framework became effective without delay, although current market participants have been allocated 180 days to submit applications for the necessary licenses or authorizations. According to the CBN, this comprehensive framework seeks to foster responsible innovation while simultaneously safeguarding consumers and maintaining financial stability.
This regulatory action comes after President Bola Tinubu issued an executive order in July, which was designed to establish coordinated cryptocurrency supervision among various Nigerian regulatory bodies while preserving their current jurisdictional authorities.
Stablecoin issuers face new capital and reserve rules
According to the newly established regulations, entities issuing stablecoins are required to maintain full backing for their digital tokens through reserve assets and hold an additional capital buffer equivalent to no less than 2% of the total token value. A minimum of 40% of these reserve holdings must be composed of cash deposits or approved highly liquid financial instruments.
The regulatory framework additionally establishes minimum paid-up capital thresholds of 10 billion naira ($7.4 million) for entities issuing naira-pegged stablecoins and 15 billion naira ($11.1 million) for organizations issuing stablecoins backed by foreign currencies.
Furthermore, businesses offering payment-oriented cryptocurrency services, which encompass exchange platforms and custodial service providers, are obligated to hold minimum paid-up capital totaling 1 billion naira ($742,000).
The regulatory provisions further ban stablecoins that depend predominantly on algorithmic mechanisms instead of qualifying reserve assets to preserve their pegged value, in addition to digital tokens that do not provide enforceable redemption mechanisms.
Nigeria's crypto crackdown enters a new phase
The Nigerian government has adopted a stringent regulatory stance toward cryptocurrency trading activities, having previously implemented restrictions on banking services available to digital asset exchanges and attempting to curtail peer-to-peer transactions conducted in the local currency.
The nation attracted significant global attention from participants in the cryptocurrency sector due to its contentious dispute with Binance, which ranks as the world's leading cryptocurrency trading platform measured by transaction volume.
In March 2024, Binance suspended its Nigerian naira-related services following intense government examination of cryptocurrency trading activities and accusations involving currency manipulation practices. Nigerian law enforcement authorities additionally held Binance executive Tigran Gambaryan in detention for approximately eight months before ultimately dismissing money laundering charges brought against him in October 2024.
In more recent developments, Nigeria's tax collection agency implemented cryptocurrency taxation regulations applicable to digital asset service providers and peer-to-peer trading platforms in August 2026.