Coming soon, the Nigerian central bank would be open to creating a regulatory framework for possible applications of stablecoins, according to a newly released document.
The regulation of initial coin offerings (ICOs) and how they can develop into “a new approach to draw in foreign direct investment (FDI) and raise capital” are also covered in the text.
The Central Bank of Nigeria (CBN) stated in a document about its payments system that it would be open to creating “a regulatory framework for the prospective deployments of the stablecoins.”
According to the document, these stablecoin deployments are expected to be an effective payment mechanism, hence “a regulatory framework for such implementation” must be developed.
The CBN’s Nigeria Payments System Vision 2025 document highlights the development of a framework to govern initial coin offers, in addition to discussing stablecoin deployments (ICOs).
Although the letter acknowledged the potential importance of ICOs, it also stated that regulation is necessary to rekindle investor enthusiasm for this type of fundraising.
According to the document, the absence of regulation around the present round of ICOs has made adoption difficult.
Nevertheless, given the significance of ICOs as an asset class, it may be possible to employ ICO technology as a fresh method of capital project fundraising (in the wholesale market), peer-to-peer lending, or crowdsourcing (in the retail market).
The letter continues by stating that ICOs might develop into “a new means to attract foreign direct investment (FDI) and raise cash” once a perfectly done and assisted legal framework is in place.
The most recent payments system paper implies that the CBN’s attitude toward privately produced digital currencies has changed, even though the central bank has in the past banned or prohibited financial institutions from assisting transactions that use cryptocurrencies.
Certain Nigerian pundits charged the central bank with overthrowing the authority of the Nigerian Securities and Exchange Commission when the CBN ordered banks to halt providing services to cryptocurrency firms in February 2021. (NSEC).
Nevertheless, the document states that the CBN and NSEC would jointly oversee the digital currency market by 2025 when there will be no need for cash.
The memo notes that although the SEC would need to develop a regulatory framework because tokens would be a new asset class, “[the] CBN would have a role in the payment component.”
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