A new report sheds light on the potential use of a stablecoin in Nigeriain addition to regulations on ICOs and the national CBDC – eNaira.
At the end of 2022, the Central Bank of Nigeria (CBN) introduced the “Nigerian Payment System Vision (PSV) 2025”, a strategic agenda for the country’s payment system over the next two years.
The document covers several key highlights, some of the most remarkable aspects of which include the potential adoption of stablecoins.
Nigeria wants Stablecoin
Stablecoins are potentially subject to regulatory oversight. The implementation of stablecoins, as noted by the CBN, “It could be a successful payment mechanism.”
Therefore, it is important to create a legal framework for this type of cryptocurrency.
The CBN also wants to regulate initial coin offerings (ICOs). ICO is a popular form of fundraising done by cryptocurrency initiatives. ICOs are driving huge interest in startups with Ethereum being a successful example.
However, the rapid growth of ICOs has turned rogue. The number of projects ripping off customers has doubled, prompting regulators to take action.
Regulated ICOs, according to the report, will not only add a layer of protection to customers’ investments, but also benefit them.
The CBN stated that ICOs can be a new fundraising approach in the wholesale and retail markets. The bank is working with the Securities and Exchange Commission (SEC) to develop a regulatory framework if it is to move forward “ICO-based investment solutions.”
Apart from the above highlights, the CBN also advised to establish cyber security standards that comply with regulations. Cyber crime has grown over the past few years following the growth of digital innovation.
The bank wants to use AI and Big Data methods to solve these problems, initially by increasing the level of vulnerability identification.
Sharp Focus On CBDCs
A CBDC is emphasized in the report although the adoption rate is less than what the authorities expected.
eNaira, a digital currency issued by Nigeria’s central bank, is officially launched in October 2021. Nigeria is one of the first countries to use CBDC with the introduction of a national digital currency.
However, the biggest problem is the country’s current level of mainstream adoption. Less than 0.5% of Nigerians are said to be using eNaira as of October 25, 2022.
A CBDC system needs to be developed as Nigeria strives to become a cashless country in the near future. According to the CBN, the CBDC could implement a plan to transform Nigeria’s economy within three to five years.
The majority of major central banks are also working to develop CBDCs. Eleven CBDC pilots are currently underway. China is experimenting with CBDC more thoroughly than other big economies, according to this.
Beijing is likely to urge consumers around the world to use the virtual currency for the Winter Olympics, although an official launch date has yet to be set.
The Boston Federal Reserve is working with the Massachusetts Institute of Technology to publish original research as the US Federal Reserve (FED) looks for a digital dollar.
Because 2023 is coming after a year of terrible events and an unclear regulatory environment. The European Union (EU) passed the MiCA law last year, setting the stage for countries in the region.
This year, the US is also working on more transparent laws regarding digital money.
Establishing a comprehensive regulatory framework to protect cryptocurrency users and provide a level playing field in the market is difficult because the regulations must be carefully implemented in terms of how best to protect consumers from harm.
On the other hand, global regulatory interference may limit the growing industry, but only time will tell.