Nigeria's central bank licenses stablecoins, bans algorithmic ones

Here's what happened. The Central Bank of Nigeria's new rules for crypto assets that are not securities took effect on Thursday, according to The Block.

Stablecoins, tokens meant to hold a steady value, now come in two classes. Naira-linked coins must be issued by a Nigerian company. Coins tied to foreign money, such as the US dollar, can only be offered in Nigeria through a locally incorporated issuer with its own licence. Each token needs the central bank's approval before it launches.

The money behind the coins is tightly controlled. Every token must be backed one-for-one, plus a buffer of at least 2%, under the rules. For naira coins, at least 20% of that pool must sit as a cash deposit at the central bank, earning no interest. No single bank may hold more than 30% of it.

So what is banned? "Algorithmic" stablecoins, which try to stay stable by adjusting supply rather than holding real assets. Issuers also cannot pay interest to holders.

Existing firms have 180 days to apply for a licence, The Block reported. Nigeria's securities regulator keeps oversight of crypto assets that count as securities.