Nigeria has banned algorithmic stablecoins and introduced reserve requirements for issuers as it expands central bank oversight of crypto payment services.

Nigeria’s central bank has introduced new licensing and reserve requirements for cryptocurrency companies, tightening oversight of stablecoins and digital asset payment services in one of Africa’s largest crypto markets.

The Central Bank of Nigeria (CBN) issued the Regulations for the Operations of Non-Security Virtual Assets on Thursday, establishing rules for stablecoin issuers, crypto payment providers, exchanges, custodians and other covered service providers.

The regulations took effect immediately, though existing operators have 180 days to apply for licenses or authorizations. The CBN said the framework aims to support responsible innovation while protecting consumers and financial stability.

The move follows President Bola Tinubu’s July executive order, which sought to coordinate crypto oversight among Nigerian authorities without changing their existing powers.

Under the new regulations, stablecoin issuers must fully back their tokens with reserve assets and maintain an additional buffer equal to at least 2% of their value. At least 40% of reserves must consist of cash or qualifying highly liquid assets.

The rules also set minimum paid-up capital of 10 billion naira ($7.4 million) for naira-backed issuers and 15 billion naira ($11.1 million) for foreign currency-backed stablecoin issuers.

Additionally, companies providing payment-related crypto services, including exchange and custody services, must maintain minimum paid-up capital of 1 billion naira ($742,000).

The regulations also prohibit stablecoins that rely primarily on algorithms rather than eligible reserves to maintain their value, along with tokens that lack enforceable redemption rights.

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