Nigeria Bans Algorithmic Stablecoins, Sets Capital Rules for Crypto Firms

Nigeria's central bank has banned algorithmic stablecoins and imposed full-reserve backing requirements on issuers, effective immediately, under new licensing rules published Thursday. The Central Bank of Nigeria (CBN) issued the Regulations for the Operations of Non-Security Virtual Assets, establishing a licensing framework for stablecoin issuers, crypto payment providers, exchanges, custodians and other covered service providers in one of Africa's largest crypto markets.

Existing operators have 180 days from the regulations' effective date to apply for licenses or authorizations. The CBN said the framework aims to support responsible innovation while protecting consumers and financial stability.

The move follows President Bola Tinubu's July executive order, which sought to coordinate crypto oversight among Nigerian authorities without altering their existing powers.

What do the reserve and capital rules require?

Stablecoin issuers must fully back their tokens with reserve assets and hold an additional buffer equal to at least 2% of the tokens' value. At least 40% of reserves must consist of cash or qualifying highly liquid assets.

Minimum paid-up capital requirements scale with the issuer's backing currency:

• 10 billion naira ($7.4 million) for naira-backed stablecoin issuers
• 15 billion naira ($11.1 million) for foreign currency-backed issuers
• 1 billion naira ($742,000) for companies providing payment-related crypto services, including exchange and custody services

For context, the payment-services threshold of roughly $742,000 sits well below the stablecoin issuer bar, reflecting the CBN's view that reserve management carries the greater systemic risk. The 2% buffer requirement echoes the loss-absorbing cushion that Basel-style prudential frameworks impose on deposit-taking institutions.

The regulations also prohibit stablecoins that rely primarily on algorithms rather than eligible reserves to maintain their value, and they bar tokens that lack enforceable redemption rights. The prohibition effectively excludes the design class that collapsed with TerraUSD in 2022 from the Nigerian market.

How does this fit Nigeria's enforcement trajectory?

Nigeria has taken a restrictive approach to crypto trading. Authorities previously limited banking access for exchanges and sought to restrict peer-to-peer trading in local currency.

The country drew international attention over its dispute with Binance, the world's largest cryptocurrency exchange by trading volume. Binance discontinued its Nigerian naira services in March 2024 amid government scrutiny of crypto trading and allegations of currency manipulation. Nigerian authorities detained Binance executive Tigran Gambaryan for nearly eight months before dropping money laundering charges against him in October 2024.

More recently, Nigeria's revenue agency introduced crypto tax collection rules for digital asset platforms and peer-to-peer marketplaces in August 2026.

What does this change for operators?

The framework converts Nigeria's largely restrictive posture into a formal licensing regime with hard balance-sheet thresholds. Issuers targeting the naira market must now decide whether the capital commitment — at minimum $7.4 million, and double that for foreign-currency issuers — justifies operating under CBN supervision with full reserve backing and redemption obligations. Exchanges and custodians face a lighter but still material bar at 1 billion naira.

The 180-day application window is the operative deadline. Firms that fail to file within it will fall outside the authorized perimeter in a jurisdiction that has already demonstrated willingness to restrict banking access and pursue enforcement against major platforms. Issuers of algorithmic or non-redeemable tokens, meanwhile, have no compliance path at all — the design itself is prohibited.

Market participants should expect the CBN to use the licensing round to sort the Nigerian market into a small set of capitalized, reserve-backed operators, with the August 2026 tax rules layering a second compliance obligation on top.