IMF Calls on Nigeria to Tighten Stablecoin Regulations Over Sovereignty Risks

The International Monetary Fund (International Monetary Fund)  has called on Nigerian authorities to strengthen regulation of stablecoins and broader crypto-asset activity, warning that the rapid expansion of digital currencies could undermine the country’s monetary sovereignty and financial stability. The recommendation was made following the IMF Executive Board’s 2026 Article IV Consultation with Nigeria, which examined recent macroeconomic and financial sector developments.

The IMF report highlights Nigeria as one of the world’s most active crypto-asset markets, driven by strong retail adoption and capital inflows. Data cited in the assessment indicates that Nigeria ranked among the top countries globally in crypto adoption in recent Chainalysis indices, with tens of billions of dollars in digital asset value flowing through the economy between mid-2023 and mid-2024. Stablecoins—particularly US dollar–pegged assets such as Tether (USDT) and USD Coin (USDC)—have become the dominant bridge between crypto markets and Nigeria’s formal financial system.

According to the IMF, widespread adoption has accelerated “digital dollarization,” where households and businesses increasingly use dollar-linked stablecoins to preserve value amid inflationary pressure and naira depreciation. The Fund warned that this trend could weaken the effectiveness of monetary policy, increase capital flow volatility, and heighten risks to the banking sector through disintermediation. It also noted that while earlier restrictions on crypto activity reduced formal oversight, they inadvertently pushed transactions into peer-to-peer channels where stablecoins became even more prevalent.

The IMF acknowledged that stablecoins can improve financial inclusion and reduce cross-border payment costs, but stressed that they must be properly regulated. It recommended that Nigeria align its framework with global standards set by the Financial Stability Board (Financial Stability Board), including licensing requirements for service providers, consumer protection rules, and reporting thresholds for conversions between naira and digital assets. It also emphasized stronger coordination between regulators, particularly the Central Bank of Nigeria (Central Bank of Nigeria) and the Securities and Exchange Commission (Securities and Exchange Commission Nigeria).

In response, Nigerian authorities said they are working on a joint regulatory framework between the CBN and SEC to improve oversight of crypto and stablecoin activities. They also pointed to ongoing efforts to strengthen anti–money laundering and counter-terrorism financing systems using blockchain analytics tools. Meanwhile, adoption of the country’s regulated naira-pegged stablecoin, cNGN, remains limited, as dollar-backed alternatives continue to dominate user preference and liquidity in the market.