The Central Bank of Nigeria Approves Africa Stablecoin Consortium to Launch cNGN Stablecoin
The Central Bank of Nigeria (CBN) has granted approval to the Africa Stablecoin Consortium (ASC) to launch the cNGN stablecoin in its regulatory sandbox. The stablecoin is set to be introduced on February 27, 2024, according to a Friday blog post by the Africa Stablecoin Consortium.
The cNGN stablecoin adheres to the regulatory requirements and standards established by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU). The consortium is committed to engaging with regulators to ensure compliance, consumer protection, and transparency throughout the project.
The cNGN stablecoin is designed to complement the eNaira, rather than replace it. The Africa Stablecoin Consortium will oversee the cNGN stablecoin, which is currently interoperable with strategic blockchains such as Bantu and BNB Smart Chain.
cNGN Will Be Pegged 1:1 to Nigerian Naira
The cNGN stablecoin is pegged 1:1 to the Nigerian naira and its value is backed by reserves held in designated commercial banks. Its primary objective is to bridge the gap between the Nigerian naira and digital currencies in the global market using blockchain technology.
One of the key advantages of the cNGN stablecoin is its potential to facilitate faster and more cost-effective remittances from Nigerians abroad to their families within the country. By leveraging blockchain technology, it eliminates lengthy waiting periods and reduces transaction fees associated with traditional remittance processes.
The cNGN stablecoin is built on public blockchains such as Bantu, Polygon, Ethereum, BNB Smart Chain, and Tron, allowing for interoperability and expanding its usability on an international scale.
Nigeria Embracing Blockchain Technology
The CBN has expressed its desire for the Nigerian financial system to support and embrace blockchain technology. In a circular issued to banks on December 22, the central bank lifted restrictions on Nigerian banks facilitating cryptocurrency transactions, signaling a more favorable regulatory environment for the crypto industry.
Nigeria has witnessed significant cryptocurrency adoption, driven by the population’s desire to hedge against the weakening local currency. The Nigerian naira has depreciated by almost 49% this year, leading residents to seek crypto assets as a store of value.
A recent survey revealed that Nigeria is the most crypto-savvy nation, with 99% awareness of cryptocurrencies and 70% understanding the value and fundamentals of blockchain technology.
Hot Take: Central Bank of Nigeria Approves Africa Stablecoin Consortium to Pilot cNGN Stablecoin in Regulatory Sandbox
The Central Bank of Nigeria has granted approval for the Africa Stablecoin Consortium to launch the cNGN stablecoin in its regulatory sandbox. The cNGN stablecoin is pegged 1:1 to the Nigerian naira and aims to bridge the gap between the local currency and digital currencies using blockchain technology. It offers advantages such as faster and cost-effective remittances and interoperability with various public blockchains.
This move by the CBN reflects Nigeria’s growing adoption of cryptocurrencies and its desire to embrace blockchain technology. With the depreciation of the Nigerian naira, residents are turning to crypto assets as a store of value. The approval of the cNGN stablecoin demonstrates a more favorable regulatory environment for the crypto industry in Nigeria.
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