By
Bhushan Akolkar
May 17th, 2024
The cNGN will serve as a complement, not a substitute for the country’s fiat currency.
On January 4, 2024, the Central Bank of Nigeria (CBN) authorized the Africa Stablecoin Consortium (ASC) to pilot its cNGN, a stablecoin currency pegged 1:1 to the Nigerian naira.
ASC, comprised of prominent financial companies, fintech innovators, and blockchain experts, unveiled its plan to launch the stablecoin currency last year. The country’s central bank has now approved the plan, scheduling the cNGN launch for February 27, 2024.
The move comes after the CBN lifted its two-year ban on cryptocurrencies, citing increased global demand for the adoption of the crypto space.
Nigerian Stablecoin to Be Backed by Reserve Assets
According to a blog post, cNGN will be backed by reserve assets such as the Nigerian naira held in select commercial banks across the country. The stablecoin will be designed to bridge the gap between the naira and digital currencies in the global market through blockchain technology.
ASC said the cNGN stablecoin will adhere to the regulatory standards and guidelines put forward by the country’s financial regulators, including the Nigerian Securities and Exchange Commission and the Nigerian Financial Intelligence Unit.
Additionally, the group said it is currently working with other financial regulators to ensure compliance, consumer protection, and transparency.
The ASC stated that it is committed to “enhancing secure and compliant financial interactions, revolutionizing the way people transact and engage with their money securely and seamlessly.”
Unlock a New Chapter of Financial Freedom
The Africa Stablecoin Consortium disclosed that the launch of the digital asset next month will bring a new chapter of financial freedom to the Nigerian masses.
The cNGN will serve as a complement, not a substitute for the country’s fiat currency. With the stablecoin, Nigerians abroad and those within the country can send and receive money to their friends and families.
“Building a future-proof financial system that leverages technology to streamline transactions and enhance security for Nigeria, the cNGN is only the beginning,” ASC said.
The move aims to eliminate the outrageous fees and long wait times Nigerians abroad pay to traditional payment processors to send money home to their families.
cNGN to Extend to More Blockchains Soon
Currently, the stablecoin is interoperable with strategic blockchains such as Bantu and BNB Smart Chain. However, the ASC plans to extend the interoperability to other blockchain protocols soon.
The stablecoin aims to complement the enhanced capabilities of the country’s payment rails. It paves the way for further advancements in CBDC utilization, Regulatory Sandbox Frameworks, and API and Open Banking. The stablecoin will be based on five core pillars: reliability, innovation, security, transparency, and scalability.
The cNGN is not the first crypto initiative introduced in Nigeria. In 2021, the CBN introduced its central bank digital currency (CBDC), eNaira. In contrast to the eNaira, which was designed with broader functionalities and under the control of the CBN, the cNGN will be exclusively overseen by ASC.