Nigeria's Central Bank Issues Stablecoin Licensing Rules and Bans Algorithmic Tokens From 5 November

The Central Bank of Nigeria (CBN) has issued Regulations for the Operations of Non-Security Virtual Assets in Nigeria, introduced by circular PSP/DIR/PUB/CIR/001/004 of 5 November 2026 from the Payments System Policy Department. The circular, signed by Director Musa I. Jimoh, states that the Regulations take effect from 5 November 2026. They create a licensing and prudential framework for stablecoins, Deposit Money Tokens, related virtual asset service providers, peer-to-peer facilitation, custody, transfer, remittance, clearing and settlement under the CBN's payments mandate, and leave securities-related virtual assets with the Securities and Exchange Commission (SEC).

Under Section 54, an existing operator must apply for the appropriate CBN licence or authorisation within 180 calendar days of commencement. During that window it may continue only at its existing scale and under interim conditions, provided it registers with the Bank within 30 days, meets AML/CFT/CPF requirements from commencement, starts supervisory reporting within 60 days or any earlier period the Bank sets, and files a complete application inside the transition. Failure to apply on time requires cessation until the required licence or authorisation is obtained.

What the New Licensing Framework Requires

Section 6 creates the main licence categories. A Naira-referenced Issuer Licence (Class 1) authorises issuance of Class 1 stablecoins that have received Token Approval. A Foreign Currency Issuer Licence (Class 2) does the same for Class 2 stablecoins. Other Services Licence and Other Services Authorisation cover non-issuance services for persons without or with a SEC virtual-asset licence. Approval to Extend Permitted Activities lets a CBN-licensed financial institution add specified non-security virtual asset payment activities to its principal licence. Section 6.1 prohibits carrying on a regulated activity in or from Nigeria, or directing such an activity at persons in Nigeria, without the required grant. The covering circular adds that the rules also reach activities that may materially affect Nigeria's payments system, financial system, foreign exchange market or financial stability, whether or not the person has a physical presence in Nigeria.

Capital floors sit in Sections 15 and 16. A Class 1 licensed issuer must maintain paid-up capital of ₦10 billion on entry and at all times thereafter, or any higher amount the Bank prescribes. A Class 2 licensed issuer must maintain at least ₦15 billion. Providers of other non-security virtual asset services must maintain at least ₦1 billion, additional to any SEC capital where they also hold a SEC licence. Class 1 and Class 2 issuers must be Nigerian-incorporated. Section 6.5 states that a foreign-currency-referenced stablecoin may be made available to persons in Nigeria only as a Class 2 stablecoin issued through a Nigerian Class 2 licensed issuer; a foreign licence or intermediary does not substitute for that licence or for Token Approval.

Section 2.2 lists Prohibited Tokens. Algorithmic stablecoins that seek to keep a stable value solely or primarily through algorithmic supply or demand adjustment rather than full backing by eligible reserve assets are banned, as are tokens that reference fiat currency but are backed wholly or primarily by other virtual assets, tokens linked to sanctioned persons or jurisdictions, purported stablecoins without an enforceable right of redemption at par, and any other token the Bank determines poses an unacceptable risk to monetary or financial stability.

Reserves, Redemption and Who Is Affected

Licensed issuers face reserve and redemption rules. No issuer may mint stablecoin tokens unless equivalent eligible reserve assets have already been received and held in the Reserve Pool. Section 24.4 requires overcollateralisation of not less than 2% of the par value of stablecoins in circulation. Holders have an absolute right to redeem at par, and issuers must redeem in the reference currency by the end of the business day after a valid request, subject to limited stress-event extensions the Bank may permit. Class 1 issuers must also keep at least 20% of the Reserve Pool as a cash deposit at the CBN. Token Approval is required before a specific stablecoin may be issued and covers classification, reference currency, reserve arrangements, name, ticker and supported networks; it is not a Bank guarantee.

Who is affected includes Nigerian and offshore stablecoin issuers targeting Nigerian users; VASPs providing non-security exchange, transfer, custody or related payment services; peer-to-peer platform operators; and CBN-licensed institutions extending into these activities. Firms already under the SEC for securities-related virtual assets that also want non-issuance services for non-security tokens need a CBN Other Services Authorisation. Pure capital-market token activity remains with the SEC under the Investments and Securities Act, 2025; the circular and Regulations do not displace that mandate.

What Comes Next

The practical clock started on 5 November 2026. Existing operators have 180 calendar days from commencement to apply, with registration due within 30 days and supervisory reporting within 60 days, while scale stays frozen unless the Bank sets other interim conditions. Class 2 arrangements already in the market will be assessed against Nigerian incorporation, issuer licensing and service-provider approval; continued access during assessment needs the Bank's express interim permission.

Operators should map each product to Class 1, Class 2, Deposit Money Token, other designated token or prohibited token; confirm whether they need an issuer licence, other-services grant or an extension of a principal banking licence; and plan capital, reserve, redemption, Travel Rule and reporting builds against the Section 54 timetable. Cross-mandate firms will need coordinated filings with both the CBN and the SEC. VASP Tracker's Nigeria page currently summarises the SEC side of the regime; the CBN framework, capital floors and transition deadlines now need to be reflected in the country record and timeline.