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CBN To Regulate Stablecoins, Virtual Asset Exchanges And Wallet Providers In Nigeria
CBN To Regulate Stablecoins, Virtual Asset Exchanges And Wallet Providers In Nigeria
New guidelines establish licensing and supervision requirements for stablecoin issuers, virtual asset exchanges, custodians and payment service providers.
Foreign virtual asset firms targeting Nigerian customers will fall within the regulatory framework, even without a physical presence in the country.
Rules cover naira- and foreign currency-referenced stablecoins and deposit money tokens, while securities-based virtual assets remain under SEC jurisdiction.
November 06, () – The Central Bank of Nigeria (CBN) has introduced a regulatory framework for non-security virtual assets, bringing stablecoin issuers, cryptocurrency exchanges, wallet providers and other digital asset intermediaries within a more defined licensing and supervisory regime.
The guidelines, titled Regulations for the Operations of Non-Security Virtual Assets in Nigeria, establish requirements for the issuance, distribution, conversion, custody, transfer, redemption and settlement of regulated virtual assets.
The framework covers naira-referenced stablecoins, foreign currency-referenced stablecoins and Deposit Money Tokens (DMTs), alongside other tokens designated by the apex bank.
It also extends to virtual asset service providers involved in trading platforms, payment gateways, remittances, merchant acceptance, digital wallets and settlement infrastructure.
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Under the framework, the CBN seeks to support innovation in digital payments and financial services while addressing risks relating to monetary policy, financial stability, consumer protection, illicit financial flows and foreign exchange management.
Foreign Virtual Asset Firms Also Fall Under CBN Oversight
CBN Headquarters Photo creditcbngovng
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The guidelines apply to regulated activities carried out in Nigeria, conducted from the country or directed at Nigerian customers.
They also cover tokens offered, marketed, distributed or otherwise made available to people in Nigeria, regardless of whether the issuer or service provider has a physical presence in the country.
This means foreign issuers, distributors, exchanges and other virtual asset service providers targeting the Nigerian market may fall within the CBN’s regulatory scope.
The categories of entities covered include token issuers, market access providers, trading platforms, conversion providers, wallet service operators, custodians, reserve asset custodians and payment intermediaries.
The framework also covers businesses providing fiat on-ramp and off-ramp services, which allow customers to move funds between conventional currencies and regulated virtual assets.
Other regulated activities include transfers, payment processing, remittances, clearing, settlement, and the operation of payment system infrastructure.
The CBN’s approach is designed to bring the different stages of virtual asset transactions within its oversight, rather than focusing only on the entities issuing the tokens.
Naira And Foreign Currency Stablecoins Included
The guidelines classify regulated tokens into different categories, including naira-referenced stablecoins, classified as Class 1, and foreign currency-referenced stablecoins, classified as Class 2.
Deposit Money Tokens are also covered, alongside other designated tokens that fall within the CBN’s responsibilities for payments, settlement, foreign exchange, banking and financial stability.
The inclusion of foreign currency-referenced stablecoins is significant because these instruments can facilitate digital transactions and cross-border transfers while creating potential implications for foreign exchange management and monetary policy.
The CBN said the framework is intended to preserve the effectiveness of its monetary policy instruments and strengthen its ability to monitor and manage capital flows and foreign exchange dynamics.
It also seeks to protect holders from risks associated with issuer insolvency, inadequate reserve backing, mismanagement of assets, denial of redemption, fraud and other forms of misconduct.
Securities-Based Tokens Remain Under SEC Regulation
The CBN clarified that the guidelines do not extend to virtual assets that qualify as securities, investment contracts or other capital market products under the statutory jurisdiction of the Securities and Exchange Commission (SEC).
Such assets, including tokenised securities and collective investment schemes, remain subject to the Investments and Securities Act and the SEC’s regulatory framework.
However, payment, settlement and foreign exchange activities associated with such products may still fall within the CBN’s jurisdiction where they involve responsibilities assigned to the apex bank.
The guidelines also exclude central bank digital currencies, electronic money and certain stored-value products already regulated under existing payment system rules.
Other exclusions include loyalty points, rewards programmes and vouchers that operate within limited networks and cannot be exchanged for money or transferred to third parties.
The CBN said it would collaborate with other competent authorities where virtual asset activities fall within overlapping regulatory responsibilities.
AML Compliance, Consumer Protection And Financial Stability
Beyond licensing and supervision, the framework establishes requirements relating to governance, prudential standards, consumer protection, operational resilience and reporting obligations.
Virtual asset service providers are also expected to comply with anti-money laundering, counter-terrorism financing and counter-proliferation financing requirements.
The guidelines provide for customer due diligence, customer identification and verification, as well as compliance with the Travel Rule, which requires relevant customer and transaction information to accompany qualifying virtual asset transfers.
These requirements are intended to improve transparency, strengthen transaction monitoring and reduce the use of virtual assets for illicit financial activities.
The CBN said the overall framework would support the responsible integration of virtual assets into Nigeria’s digital payments and settlement infrastructure while safeguarding the integrity and stability of the financial system.
The guidelines derive their legal authority from the Central Bank of Nigeria Act 2007, the Banks and Other Financial Institutions Act 2020, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, the Money Laundering (Prevention and Prohibition) Act 2022 and the Terrorism (Prevention and Prohibition) Act 2022.
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