Nigeria Central Bank Enacts Stablecoin Licensing Rules, Bans Algorithmic Tokens

TL;DR

• Nigeria’s central bank introduced separate licensing categories for naira-referenced and foreign-currency stablecoins, requiring issuer authorization and token approvals under regulations effective November 5, 2026.
• Algorithmic stablecoins, certain crypto-backed fiat tokens and stablecoins without enforceable redemption rights are prohibited. Foreign-currency issuers must operate through Nigerian-incorporated licensed entities.
• Existing operators have 180 days to apply for licensing, with registration, reporting and anti-money laundering obligations. The framework also covers payments, custody and exchanges.

Nigeria’s central bank has enacted a licensing framework for stablecoin issuers and virtual asset service providers, establishing separate permissions for naira-pegged and foreign-currency tokens. Under the official regulations, effective November 5, issuers must obtain both the relevant licence and approval for individual tokens before operating. The restrictions cover stablecoins offered to Nigerian users, including arrangements operated from abroad, when their activities fall within the central bank’s jurisdiction. The rules also establish oversight for deposit money tokens and related service providers.

Foreign Issuers Face Local Licensing and Compliance Rules

The framework distinguishes Class 1 naira-referenced stablecoins from Class 2 tokens linked to foreign currencies. Foreign-currency stablecoins require issuance through a Nigerian-incorporated entity holding a Class 2 licence before they can be offered, traded, distributed or held in custody for local users. Overseas authorization or an agreement with a Nigerian intermediary does not replace domestic licensing, even where the issuer already directly serves Nigerian customers. Each token also requires approval covering its currency reference, reserve arrangements and operational characteristics.

The bank additionally prohibits algorithmic stablecoins that rely primarily on supply or demand adjustments instead of eligible reserve assets. The restrictions extend to fiat-referenced tokens backed mainly by cryptocurrencies, tokens associated with sanctioned persons and purported stablecoins lacking enforceable redemption rights at par. These limitations separate reserve-backed issuance from mechanisms that cannot meet the regulator’s stated backing and redemption standards, amid wider discussion of stablecoin reserve requirements.

Regulated providers face customer identification, sanctions screening, transaction monitoring and Travel Rule obligations. The framework covers payments, remittances, custody, exchanges and settlement services, while leaving securities and capital-market products under the Securities and Exchange Commission. Firms conducting activities within both jurisdictions must obtain the applicable approvals. The rules therefore reach beyond token issuance to the services through which tokens enter Nigeria’s financial system, including onchain foreign exchange and payment infrastructure.

Existing operators have 180 calendar days from commencement to apply for an appropriate licence or authorization, but continuation during that period is conditional. They must register with the central bank within 30 days, meet financial-crime compliance requirements immediately and begin supervisory reporting within 60 days unless an earlier deadline applies. Operations during transition are restricted to their existing scale and any interim conditions. The measures add licensing obligations to Nigeria’s evolving oversight of crypto payment activity, without transferring securities regulation to the central bank.