Nigeria sets licensing rules for stablecoins and bans algorithmic versions

Nigeria’s central bank has published a framework for non-security virtual assets, separating naira-linked and foreign-currency stablecoin issuers. It prohibits algorithmic stablecoins and requires enforceable redemption rights.

The rules distinguish Class 1 naira-referenced stablecoins from Class 2 foreign-currency versions. They also cover deposit money tokens and services such as custody, transfers and conversion. Securities remain within the relevant securities regulator’s jurisdiction.

The framework bars tokens relying mainly on supply-and-demand algorithms instead of adequate reserves, alongside certain crypto-backed arrangements. A product marketed as a stablecoin must give holders an enforceable right to redeem at par.

The document also prohibits presenting a licence as a central-bank guarantee. Class 1 and Class 2 stablecoins must not be described as bank deposits or covered by Nigeria’s deposit insurance.

For payment users, those distinctions matter as much as the token’s name: who holds the reserves, what can be redeemed, and which permission a provider actually has. The published framework is not evidence that any particular issuer has already received approval.