The Central Bank of Nigeria (CBN) has granted approval to the Africa Stablecoin Consortium (ASC) to test the cNGN stablecoin within its regulatory sandbox. The official launch of the stablecoin is scheduled for February 27, 2024.
As stated in a blog post by the Africa Stablecoin Consortium, a collaboration involving Nigerian banks and fintech operators, the cNGN stablecoin adheres to the regulatory standards set by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU). The consortium is actively working with regulators to ensure compliance, consumer protection, and transparency.
It’s essential to note that the cNGN is designed as a complement, not a replacement, for the eNaira. While the eNaira, with broader capabilities, was created by the CBN, the Africa Stablecoin Consortium oversees the cNGN.
The cNGN is currently compatible with strategic blockchains such as Bantu and BNB Smart Chain, and there are plans to extend its compatibility to all major blockchain networks in the near future.
According to reports, the cNGN token maintains a 1:1 peg to the Nigerian naira, the country’s fiat currency, and is backed by Naira reserves held in designated commercial banks. This stablecoin aims to narrow the divide between the Nigerian Naira and global digital currencies, leveraging blockchain technology.
The cNGN seeks to streamline the process of Nigerians abroad sending money to their families in Nigeria, eliminating the delays associated with traditional remittances and avoiding expensive fees linked to international transactions.
In contrast to the eNaira central bank digital currency, this new stablecoin is built on public blockchains such as Bantu, Polygon, Ethereum, BNB Smart Chain, and Tron. Similar to established stablecoins, the cNGN offers interoperability across various public blockchains, facilitating global transfers and expanding its international usage.
As per the blog post, the Central Bank of Nigeria (CBN) aims to encourage and enable the financial system to embrace blockchain technology. In a circular issued to banks on December 22, the CBN acknowledged the growing global demand and adoption of cryptocurrencies, consequently lifting restrictions on Nigerian banks for facilitating cryptocurrency transactions.
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