Nigeria Sets Stablecoin Licensing Rules and Bans Algorithmic Tokens

By Matthew Brienen

Published: 2026-11-06T17:04:30+00:00

A new framework for stablecoin payments

Nigeria's central bank has introduced a licensing framework for stablecoins and other non-security virtual assets, with rules that took effect on November 5. The framework separates naira-referenced tokens from those tied to foreign currencies and prohibits algorithmic stablecoins that depend primarily on supply adjustments or market incentives to hold their value.

The regulations cover payment and settlement activity linked to Nigeria, including services directed at Nigerian users by businesses operating overseas. An offshore location does not, by itself, put an issuer outside the central bank's requirements. For companies using stablecoins in remittances or commerce, access to Nigerian customers now comes with a more explicit licensing process.

Local and foreign-currency issuers face different requirements

The Central Bank of Nigeria divides stablecoins into Class 1 tokens referencing the naira and Class 2 tokens referencing other currencies. Foreign-currency tokens offered to Nigerians must come through a Nigerian-incorporated entity with the appropriate Foreign Currency Issuer Licence. Each token also needs written approval before issuance begins.

That token-level review covers the reference currency and reserve arrangements, along with the token's name, ticker and supported blockchain networks. Approval of a company therefore does not automatically clear every asset or network it wants to support. A business expanding its stablecoin offering will need to account for the permissions attached to the individual product.

The framework sets minimum paid-up capital at ₦10 billion for naira-referenced issuers and ₦15 billion for foreign-currency-referenced issuers, according to reporting by TheCable and Punch on the regulations. Providers of other covered services, including wallets and transfers, face a separate ₦1 billion threshold. Capital required under an existing securities licence does not replace the central bank's requirement.

Reserve backing and transaction checks take priority

The algorithmic-token prohibition puts reserve-backed payment instruments at the centre of the framework. A token cannot qualify simply because its design targets a stable price. The rules also prohibit fiat-referencing tokens backed wholly or primarily by other virtual assets, according to the published regulatory text reproduced by RegAlert.

Operators must apply customer due diligence, sanctions screening and transaction monitoring. Travel Rule obligations extend across covered custodial wallets, peer-to-peer services and remittance channels. These requirements mean a blockchain transfer can remain subject to identity and compliance checks even when the underlying network is open to anyone.

The central bank also requires reserve, liquidity, redemption, governance and cybersecurity controls. It can place limits on foreign-currency stablecoin activity where it identifies risks to monetary policy, foreign-exchange management or the payments system. Permission to operate is therefore subject to continuing supervision, rather than a one-time application.

Existing operators have a conditional transition

Existing businesses have 180 days to complete applications for the relevant licence or authorisation. TheCable reports that the transition also includes registration within 30 days and supervisory reporting within 60 days. Continuing operations during that period is conditional and limited to the existing scale, subject to the central bank's directions.

Responsibility remains divided by activity. The central bank oversees payment, transfer, remittance and settlement uses within its mandate, while Nigeria's Securities and Exchange Commission retains oversight of securities and capital-market activity. A company operating across both areas may need approvals from both regulators.

For the market, the immediate consequence is a clearer but more demanding route to offering stablecoin services. The practical outcome will depend on which issuers apply, which tokens receive approval and how the transition is enforced. The framework does not establish that every foreign stablecoin already circulating in Nigeria has been approved, and users should not read the licensing announcement as a blanket endorsement of existing products.