New Nigerian Central Bank Document Discusses Stablecoin and ICO Regulation – Bitcoin News

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According to a recently unveiled document, the Nigerian central bank will in the future be open to developing a regulatory framework for potential stablecoin implementations. The paper also discusses the regulation of initial coin offerings (ICOs) and how these can become “a new way to attract foreign direct investment (FDI) and raise capital.”

“A successful payment mechanism”

In its recently unveiled payment system document, the Central Bank of Nigeria (CBN) said the bank would be open to developing “a regulatory framework for [the] potential stablecoin implementations. The document claims that such stablecoin implementations are likely “to be a successful payment mechanism”, so there is “need to develop a regulatory framework for such an implementation”.

Along with mentioning stablecoin implementations, the CBNs Nigeria Payments System Vision 2025 document also discusses creating a framework to regulate initial coin offerings (ICOs). While acknowledging the key role that ICOs can play, the document however indicates that regulation is necessary if investors are to revive interest in this form of fundraising.

“There is little appetite to adopt the current cycle of ICOs given their lack of regulation. However, given the role of ICOs as an asset class, it is possible to adopt ICO technology as new approach to fundraising for investment projects (in the wholesale market) or peer-to-peer lending or crowdfunding (for the retail market),” reads the document.

The document adds that once a properly implemented and supported regulatory framework is in place, ICOs could become “a new way to attract foreign direct investment (FDI) and raise capital.”

Regulation of Initial Coin Offerings

While the CBN has in the past discouraged or prohibited financial institutions from facilitating transactions involving cryptocurrencies, the latest payment system document suggests that central banks’ stance on private sector-issued digital currencies has evolved.

After the CBN ordered banks to stop extending services to crypto entities in February 2021, some Nigerian commentators accused the central bank of usurping the powers of the Nigerian Securities and Exchange Commission (NSEC). However, according to the document, which envisions a cashless economy by 2025, the CBN and NSEC will jointly regulate the digital currency space.

“[The] CBN would have a role in the payment aspect, but the SEC would have to provide a regulatory framework since tokens would be a new asset class,” the document states.

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Terence Zimwara

Terence Zimwara is an award-winning journalist, author and writer in Zimbabwe. He has written extensively on the economic issues of some African countries as well as how digital currencies can provide an escape route for Africans.

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