The Central Bank of Nigeria, CBN, has proposed a minimum capital requirement of ₦15 billion for companies seeking to issue foreign-currency-backed stablecoins in Nigeria, in a move that could raise the cost of entering the country’s virtual asset market and reshape competition among operators.
In a statement, the CBN said under the proposed regulations for non-security virtual assets, issuers of naira-referenced stablecoins would be required to maintain a minimum paid-up capital of ₦10 billion, while foreign-currency-referenced stablecoin issuers would face a higher threshold of ₦15 billion.
Other virtual asset service providers, including exchanges, custodians, wallet operators and payment service providers, would be required to maintain at least ₦1 billion in capital.
The bank said “the requirement would be additional to any capital prescribed by the Securities and Exchange Commission or another principal licensing framework, with operators barred from counting the same capital twice.”
The proposed framework also requires companies seeking final approval to be incorporated in Nigeria and maintain a staffed physical office in the country.
It states that foreign regulatory oversight “shall supplement, and shall not displace, the Nigerian incorporation, capital, licensing and ongoing requirements” applicable to licensed issuers.
Analysts however, said the requirements could make it more expensive for smaller fintech companies and start-ups to enter the stablecoin business, potentially favouring better-funded financial institutions and technology companies.
They said: “existing operators may also need to raise fresh capital, restructure their businesses or seek partnerships to meet the proposed standards.”
Similarly, the CBN further proposes a non-refundable application fee of ₦10 million for stablecoin issuers, alongside an annual renewal fee of ₦5 million for both issuer classes.
For existing operators, the proposed transition framework provides 30 days to register, 60 days to begin supervisory reporting and 180 calendar days from commencement to submit a licence application. Operators that fail to apply within the stipulated period would be required to stop the regulated activity until licensed.
According to the document, “an existing licence from another regulator would not automatically authorise a company to provide services covered by the proposed framework. Businesses operating across both securities and non-security virtual asset activities would need to meet the relevant regulatory requirements.”
Stablecoin Reserve Rules
The Central Bank has also proposed stricter reserve and redemption requirements for stablecoin issuers, seeking to ensure that digital tokens remain backed by sufficient assets and that holders can recover their money when they request redemption.
The proposed regulations for non-security virtual assets, showed that stablecoin issuers would be required to maintain full backing for their tokens, alongside a two per cent overcollateralisation buffer. At least 40 per cent of the reserve pool must be held in cash or eligible high-quality liquid assets.
Issuers of naira-referenced stablecoins would face an additional requirement to keep at least 20 per cent of their total reserve pool in a Central Bank reserve deposit account. The proposed rules also restrict how reserve assets can be used, prohibiting issuers from deploying them for operating expenses, lending or staking activities.
The framework seeks to separate customers’ backing funds from the issuer’s business operations. It also proposes that stablecoin holders should not receive interest, yield or dividends simply for holding the tokens, drawing a distinction between stablecoins and conventional interest-bearing financial products.
On redemption, the proposed rules require issuers to exchange tokens at par value within the prescribed period, without imposing standard redemption charges, subject to specified exceptions. Where an issuer’s reserve falls below the required level, it must stop issuing new tokens until the shortfall is addressed.
The rules also place obligations on issuers to maintain effective reserve management, liquidity and redemption arrangements. Applicants would be required to provide policies covering the “management, valuation, reconciliation, segregation, liquidity and redemption” of their reserve pools, as well as independent assessments of their arrangements.
The CBN said the proposed safeguards could improve confidence in stablecoins by reducing the risk that issuers create tokens without adequate backing or are unable to meet redemption requests. However, the additional reserve and reporting obligations could increase operating costs for companies seeking to issue the digital assets in Nigeria.
The Bank also proposed that customers be clearly informed that stablecoins are not bank deposits and are not covered by deposit insurance from the Nigeria Deposit Insurance Corporation. This is intended to distinguish privately issued digital tokens from deposits held with regulated banks.
