The Central Bank of Nigeria (CBN) has approved the Africa Stablecoin Consortium (ASC) to pilot the cNGN stablecoin in its regulatory sandbox. The new stablecoin is to be launched on February 27, 2024.
According to a report, the ASC — a collaboration of Nigerian banks and fintech operators — said the cNGN stablecoin complies with the regulatory requirements and standards set by the CBN, the Nigerian Securities and Exchange Commission and the Nigerian Financial Intelligence Unit. The group said it is engaging with the regulators to ensure compliance, consumer protection and transparency.
The cNGN serves as a complement, not a substitute, for the eNaira, which is the central bank digital currency (CBDC) issued by the CBN. Unlike the eNaira, which the CBN created with broader capabilities, the ASC oversees the cNGN.
The stablecoin is currently interoperable with strategic blockchains like Bantu and BNB Smart Chain, with plans to extend compatibility to all major blockchain networks soon.
According to the ASC, the cNGN token is pegged 1:1 to the Nigerian naira, the country’s fiat currency, and is backed by Naira reserves held in designated commercial banks. The stablecoin aims to bridge the gap between the naira and digital currencies in the global market through blockchain technology.
The cNGN aims to help Nigerians abroad send money to their families in Nigeria without waiting for remittances to go through. It also aims to eliminate the expensive fees associated with traditional international transactions.
According to the blog post, the CBN wants the financial system to support and facilitate blockchain technology. In a circular sent to banks on December 22, 2023 the CBN recognized the increasing global demand for and adoption of crypto and lifted restrictions on Nigerian banks facilitating cryptocurrency transactions.