Nigeria introduces stablecoin licences and bans algorithmic tokens

Nigeria has introduced a licensing framework for stablecoin issuers and payment-related crypto services, bringing reserve management, redemption arrangements and foreign-currency token distribution under more explicit central-bank supervision. The regulations took effect on November 5, 2026, with existing businesses given a limited period to apply for the approvals their activities require.

The Central Bank of Nigeria separates naira-referenced stablecoins from tokens tied to foreign currencies. Both categories require a Nigerian-incorporated issuer, while individual tokens need written approval before issuance. The framework also prohibits algorithmic stablecoins whose value depends primarily on market mechanisms rather than eligible reserve assets.

Local licences become central to market access

Class 1 licences cover naira-referenced tokens and carry a minimum paid-up capital requirement of 10 billion naira. Class 2 licences cover foreign-currency stablecoins and require 15 billion naira. The distinction matters for international issuers and their Nigerian partners: an overseas regulatory approval does not replace the domestic permissions required to serve the market.

The rules reach activities conducted in Nigeria, directed at Nigerian users or affecting its financial system. Payment, transfer, remittance and settlement uses fall within the central bank's remit. The Securities and Exchange Commission retains responsibility for securities and capital-market activities, so firms crossing both areas may need approvals from both regulators.

Reserves and redemption move into the operating model

The framework requires issuers to document their backing, custody arrangements, redemption rights and technology controls. Issuers must publish an approved whitepaper explaining how the token works and what risks holders face. Customer identification, sanctions screening, transaction monitoring and Travel Rule compliance form part of the obligations.

These requirements make authorisation an ongoing operating responsibility. A licence application by itself does not establish that a particular token is approved, that a provider has completed the process or that its services can expand without conditions.

Existing operators face several deadlines

The transition allows existing operators 180 calendar days to submit a complete licence or authorisation application. It also requires registration within 30 days and supervisory reporting within 60 days, alongside immediate financial-crime compliance. Continued operations remain subject to the central bank's interim conditions and existing scale.

For payment businesses, the practical work now involves mapping each service and token to the relevant permission, documenting reserves and preparing reporting systems. The framework establishes a route into the regulated market; its commercial impact will depend on the licences granted, implementation decisions and how firms meet the new conditions.