Key Takeaways
- cNGN adheres strictly to the regulatory standards set by the CBN, the Nigerian SEC, and NFIU.
- The stablecoin is pegged at a 1:1 ratio to the Nigerian naira and is under the oversight of the Africa Stablecoin Consortium
In a significant move, the Central Bank of Nigeria (CBN) has granted its approval for the Africa Stablecoin Consortium (ASC) to initiate a trial of the cNGN stablecoin within the regulatory sandbox.
The official launch of the stablecoin is slated for February 27, 2024. The ASC, a collaboration involving Nigerian banks and fintech entities, emphasized that the cNGN adheres strictly to the regulatory standards set by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU).
Diverging from the eNaira, a central bank digital currency designed by the CBN, the cNGN is under the oversight of the Africa Stablecoin Consortium. The stablecoin is pegged at a 1:1 ratio to the Nigerian naira, the official fiat currency, and is supported by Naira reserves held in specific commercial banks.
Currently operating on strategic blockchains such as Bantu and BNB Smart Chain, the consortium has plans to expand its compatibility to include all major blockchain networks in the near future.
A key objective of the cNGN is to facilitate quicker and more cost-effective cross-border transactions. It aims to benefit Nigerians living abroad by minimizing waiting times for remittances, circumventing the delays associated with traditional international transactions, and avoiding hefty fees. Notably, in contrast to the eNaira, the cNGN is developed on public blockchains, including Bantu, Polygon, Ethereum, BNB Smart Chain, and Tron.
This development follows the recent decision by the Central Bank of Nigeria to lift restrictions on Nigerian banks facilitating cryptocurrency transactions, signaling a more progressive approach toward digital currencies.
It also aligns with the global trend of central banks exploring and piloting central bank digital currencies (CBDCs). For instance, the Hong Kong branch of HSBC has expressed its commitment to collaborating with authorities on initiatives such as digital currencies for cross-border payments. In November 2023, the Monetary Authority of Singapore launched a pilot program for the live issuance of a CBDC based on the Singapore dollar.
