CBN imposes N15 billion capital on dollar stablecoin issuers

The Central Bank of Nigeria has set a minimum paid-up capital of N15 billion for companies issuing foreign currency-backed stablecoins, including those pegged to the US dollar. The rule is contained in the Regulations for the Operations of Non-Security Virtual Assets in Nigeria, released in a circular over the weekend.

Under Section 15.2, issuers of foreign currency-referenced stablecoins, called Class 2, must always maintain at least N15 billion in paid-up capital. Issuers of naira-backed stablecoins, or Class 1, must hold N10 billion. Other virtual asset service providers must maintain N1 billion.

Capital rules and CBN powers

The CBN said the N1 billion requirement for other virtual asset service providers is separate from any capital requirements imposed by the Securities and Exchange Commission or other regulators. The regulator could impose higher capital requirements based on transaction volumes, market significance, redemption obligations, technology risks and an operator’s exposure to the financial system.

The capital must be kept separate from reserve assets, customer funds and operational liquidity. It must also be held in cash in a designated CBN account or in approved Federal Government securities under the regulator’s lien.

Operators whose capital falls below the prescribed minimum must notify the CBN immediately and submit a capital restoration plan within 10 business days. The regulator may restrict new token issuance and customer onboarding until the shortfall is addressed.

Reserve and redemption conditions

Stablecoin issuers must maintain reserves equivalent to at least 100 per cent of tokens in circulation, plus an additional two per cent buffer. They are prohibited from creating new tokens without first receiving corresponding reserve assets.

Holders must be able to redeem their stablecoins at face value. Issuers must complete valid redemption requests no later than the end of the next business day.

The CBN also prohibited algorithmic stablecoins and fiat-linked tokens backed mainly by other cryptocurrencies. A stablecoin will be classified as systemically important if its circulating value exceeds N500 billion for 30 consecutive days or its user base in Nigeria surpasses five million people.

Local licensing and existing operators

Foreign currency-backed stablecoins must be issued through entities incorporated in Nigeria and licensed by the CBN. Licences obtained from foreign regulators will not be recognised as substitutes for local authorisation.

Existing operators have 180 days from the commencement of the regulations to apply for the required licences. The framework also covers virtual asset exchanges, wallet providers, payment gateways, remittance operators, custodians and peer-to-peer platforms, with requirements on anti-money laundering, customer identification and cybersecurity.

The capital and licensing rules raise the compliance bar for stablecoin operators targeting Nigerian users, especially dollar-backed issuers that must now hold N15 billion in paid-up capital and keep reserves fully matched.