The Central Bank of Nigeria has introduced comprehensive licensing and operational rules for stablecoin issuers and other non-security virtual asset service providers. The Regulations for the Operations of Non-Security Virtual Assets took effect on November 5, 2026, establishing separate categories for naira-referenced and foreign-currency-referenced tokens while prohibiting algorithmic designs.

Under the framework, issuers of naira-backed stablecoins, classified as Class 1, must maintain minimum paid-up capital of ₦10 billion, equivalent to approximately $7.4 million. Issuers of foreign-currency stablecoins, classified as Class 2, face a higher threshold of ₦15 billion, or about $11.1 million. Other regulated virtual asset service providers, including exchanges, custodians and payment platforms, must hold at least ₦1 billion, roughly $742,000. These capital requirements apply on entry and must be maintained continuously, remaining separate from reserve assets, customer funds and operational liquidity.

Local Incorporation and Token-Specific Approvals

Foreign-currency stablecoin issuers must operate through a Nigerian-incorporated entity that holds a valid Class 2 Foreign Currency Issuer Licence. Overseas firms cannot rely solely on licences from other jurisdictions or arrangements with local intermediaries. Each stablecoin requires separate written approval from the central bank. Applications must specify the reference currency, reserve arrangements, token name, ticker and supported blockchain networks.

The rules cover activities conducted in Nigeria, directed at Nigerian customers, or capable of affecting the domestic payments system or foreign exchange market. Companies already holding licences from the Securities and Exchange Commission must still meet the central bank’s distinct capital and authorisation standards where their activities fall under both regimes.

Full Reserve Backing and Prohibited Designs

Approved stablecoins must maintain continuous one-to-one backing with eligible reserve assets. Issuers are prohibited from creating new tokens before receiving corresponding reserves. An additional reserve buffer of at least 2 percent of the value of tokens in circulation is mandatory. At least 40 percent of reserves must consist of cash or qualifying highly liquid assets. For naira-referenced tokens, a portion of the reserve pool must be held as a cash deposit with the central bank.

The regulations explicitly ban algorithmic stablecoins that depend primarily on adjustments to token supply or demand to maintain value without adequate reserve support. Also prohibited are tokens referenced to fiat currencies but backed mainly by other cryptocurrencies, designs that do not grant holders an enforceable right to redeem at face value, and tokens issued by sanctioned entities or from sanctioned jurisdictions.

Compliance Obligations and Transition Timeline

Operators must implement customer identity verification, sanctions screening, transaction monitoring and anti-money laundering measures, including Travel Rule obligations for qualifying virtual asset transfers. Daily reconciliation of reserves against outstanding liabilities is required, along with restrictions on the use and custody of backing assets.

Existing providers of regulated virtual asset services have 180 calendar days from the regulations’ effective date to submit complete licence applications. They must register with the central bank within 30 days and begin supervisory reporting within 60 days. During the transition, firms may not expand beyond their current scale without prior approval. Those that fail to apply within the window must cease the relevant activities until authorisation is obtained.

The central bank retains primary oversight of stablecoins and virtual assets used for payments, transfers, remittances, foreign exchange and settlement. The Securities and Exchange Commission continues to regulate securities and capital-market activities. Entities operating across both spheres need approvals from each authority. Unauthorised activity carries a minimum fine of ₦100 million plus at least ₦1 million for each day the violation continues.

The measures form part of a broader effort to bring digital asset activities under formal supervision following earlier restrictions on banking access for crypto platforms, limits on peer-to-peer trading in local currency, and disputes involving major exchanges. The framework also follows an executive order aimed at coordinating oversight among Nigerian authorities and comes amid international attention to the rapid growth of stablecoin use for payments and cross-border transfers.