The Central Bank of Nigeria (CBN) has given its green light to the Africa Stablecoin Consortium (ASC) to launch the cNGN stablecoin, which is set to debut on February 27, 2024. The ASC, a collaborative effort involving Nigerian banks and fintech operators, has assured compliance with regulatory requirements and standards established by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU).
cNGN stablecoin secures regulatory approval
The Africa Stablecoin Consortium (ASC) has received formal approval from the Central Bank of Nigeria (CBN) to introduce the cNGN stablecoin within the country’s regulatory sandbox. This milestone achievement paves the way for the stablecoin’s launch on February 27, 2024.
The ASC, a consortium comprising Nigerian banks and fintech companies, has diligently adhered to the regulatory criteria and standards set by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU).
This collaboration between financial institutions and technology-driven companies primarily aims to ensure compliance, safeguard consumer interests, and maintain transparency throughout the stablecoin’s development and deployment.
This regulatory approval underscores the commitment of the ASC to work closely with the relevant authorities to guarantee the stability and legitimacy of the cNGN stablecoin.
Nigeria’s cNGN stablecoin enhances eNaira with global interoperability.
The cNGN stablecoin is designed to operate with Nigeria’s eNaira, complementing the central bank’s digital currency rather than as a substitute. Unlike the eNaira, which the CBN has developed with a wide range of capabilities, the Africa Stablecoin Consortium oversees the cNGN.
This stablecoin is currently interoperable with strategic blockchains such as Bantu and BNB Smart Chain, with plans for compatibility expansion to all major blockchain networks in the near future.
One of the key features of the cNGN is its 1:1 pegging to the Nigerian naira, the nation’s fiat currency. The stability of the cNGN is further reinforced by its backing with Naira reserves held in designated commercial banks. This innovative stablecoin is positioned to bridge the divide between the Nigerian Naira and digital currencies on the global market by harnessing the power of blockchain technology.
Empowering Nigerians abroad and reducing transaction costs
The cNGN stablecoin aims to facilitate smoother and more cost-effective cross-border transactions for Nigerians residing abroad. It allows them to send money to their families in Nigeria without enduring the delays associated with traditional remittance processes.
Additionally, the cNGN eliminates the expensive fees commonly associated with international transactions, offering a more affordable and efficient alternative for transferring funds globally.
Distinguishing itself from the eNaira, which is a central bank digital currency, the cNGN stablecoin operates on public blockchains. These include Bantu, Polygon, Ethereum, BNB Smart Chain, and Tron, providing a level of openness and interoperability characteristic of established stablecoins.
This design choice enables the cNGN to seamlessly integrate with various public blockchains, facilitating global transfers and expanding its usability internationally.
CBN’s embrace of blockchain technology
The Central Bank of Nigeria is committed to fostering innovation and technology within the financial sector. In a circular issued to banks on December 22, the CBN acknowledged the growing global demand for and adoption of cryptocurrencies.
As a result, it lifted previous restrictions that had hindered Nigerian banks from facilitating cryptocurrency transactions. This move signals the CBN’s desire to encourage and support the integration of blockchain technology into the country’s financial system.
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