New Nigerian Central Bank Document Discusses Regulation of Stablecoins and ICOs –

According to a recently unveiled document, the Central Bank of Nigeria will be open to developing a regulatory framework for possible stablecoin implementations in the future. The document also discusses the regulation of initial coin offerings (ICOs) and how these “can become a new way to attract foreign direct investment (FDI) and raise capital.”

“A successful payment mechanism”

In its recently unveiled payment system document, the Central Bank of Nigeria (CBN) said the bank was open to developing “a regulatory framework for [the] possible implementations of the stablecoin.” The document claims that such stablecoin implementations are “likely to be a successful payment mechanism,” so there is “a need to develop a regulatory framework for such an implementation.”

Besides mentioning stablecoin implementations, the CBN’s Nigeria Payments System Vision 2025 document also discusses creating a framework to regulate initial coin offerings (ICOs). While the document recognizes the key role that ICOs can play, it says that regulation is necessary if investor interest in this form of fundraising is to be revived.

"Given the lack of regulation, there is little interest in adopting the current round of ICOs. However, given the role of ICOs as an asset class, there is potential to adopt the technology of ICOs as a new approach to fundraising for capital projects (in the wholesale market) or peer-to-peer lending or crowdfunding (for the retail market)," the document says.

The document adds that once a properly implemented and supported regulatory framework is in place, ICOs “could become a new way to attract foreign direct investment (FDI) and raise capital.”

Initial regulate coin offers

While the CBN has advised against it in the past, or blocked Discouraging financial institutions from facilitating cryptocurrency transactions, the payment system's latest document suggests that the central bank's stance on privately issued digital currencies has evolved.

After the CBN ordered banks to stop extending services to crypto companies in February 2021, some Nigerian commentators accused the central bank of usurping the powers of the Nigerian Securities and Exchange Commission (NSEC). However, according to the document, which envisions a cashless economy by 2025, the CBN and NSEC will jointly regulate the digital currency space.

“[The] CBN would play a role in the payments aspect, but the SEC would have to create a regulatory framework as the tokens would be a new asset class,” the document says.

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Terence Zimwara

Terence Zimwara is an award-winning journalist, author and writer from Zimbabwe. He has written extensively about the economic struggles of some African countries, as well as how digital currencies can provide an escape route for Africans.

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