Nigeria requires local stablecoin issuers and bans algorithmic tokens

Nigeria’s central bank has introduced new rules for stablecoin issuers, requiring local incorporation for foreign operators and banning algorithmic tokens.

The Regulations for the Operations of Non-Security Virtual Assets in Nigeria, which came into effect on November 5, 2026, prohibit algorithmic stablecoins and fiat-referenced tokens backed wholly or primarily by other crypto assets.

The rules apply to overseas operators serving Nigerian users, giving holders enforceable redemption rights and setting a transition process for businesses already operating.

Local incorporation for foreign issuers

The Central Bank of Nigeria separates naira-referenced stablecoins from those referencing foreign currencies, creating two distinct classes for regulation.

A foreign-currency token can be offered, distributed, exchanged, held in custody or redeemed for Nigerian users only through a Nigerian-incorporated entity holding the relevant issuer licence.

An overseas licence or an arrangement with a Nigerian intermediary cannot replace that requirement. The rules expressly cover foreign issuers whose tokens are made available to Nigerians, even if the operator has no physical presence in the country.

Distributors must also check that a token has approval before making it available.

Capital and reserve requirements

Token approval is separate from the issuer’s licence and covers the reference currency, reserve arrangements, name, ticker and supported blockchain networks.

A naira-referenced issuer must have at least ten billion naira in capital, while a foreign-currency issuer must have fifteen billion naira.

Each minimum applies on entry and throughout operations, and the central bank can require a higher amount. Foreign-currency issuers must also appoint a Nigerian deposit money bank as their local redemption agent.

Issuers must maintain operational liquidity capable of meeting expected Nigerian redemption demand and demand under stress, keeping it separate from both the reserve pool and regulatory capital.

Reserve assets can be used only to support redemption and for permitted liquidity management, with a narrow exception for approved secured liquidity transactions against eligible high-quality liquid assets.

Redemption and transition rules

Holders of stablecoins issued under the framework have an enforceable right to redeem at par, subject to exceptions in the regulations.

Issuers must ordinarily settle a valid request in the reference currency by the end of the following business day. During a stress event, an issuer can apply to the central bank for a longer period, capped at five business days.

Standard redemption must be free, while a fee for non-standard settlement needs central-bank approval and must be proportionate to actual cost.

An issuer that suspends redemptions must notify the central bank immediately, and no later than one hour after suspension.

Existing businesses must register within thirty days of commencement and begin supervisory reporting within sixty days, or sooner if directed.

Businesses must submit a complete licence or authorisation application within one hundred and eighty calendar days. An operator that fails to submit that application must cease operations until it obtains the necessary permission.