A recently revealed document shows that the central bank in Nigeria is looking into the idea of developing a regulatory framework for stablecoins in the country.
The document in question also talks about the regulation of initial coin offerings (ICOs) and how they can turn out to be useful for raising capital and attracting direct foreign investment.
The Central Bank of Nigeria (CBN) recently unveiled a payments system document, which showed that it would be working on a regulatory framework for potentially introducing stablecoins.
The document also added that the implementation of stablecoins is meant to be a successful payment mechanism due to which they have to have a proper regulatory framework in place for accomplishing it.
The document, which was the Nigeria Payments Systems Vision 2025, did not just talk about the possible implementation of stablecoins in Nigeria.
It also talked about developing a regulatory framework that could be used for regulating initial coin offerings (ICOs) in the country.
The document acknowledged that ICOs undoubtedly play an important role, but also said that in order to boost the interest of investors in this sort of funding, they would first have to introduce regulation.
According to the document, there is not a lot of appetite in the market for ICOs because there is no regulation.
But, it said that since ICOs play the role of an asset class, it is possible that the technology of ICOs can be adapted to be used as a new approach for raising funds for different capital projects.
This can apply in the wholesale market, or can also be used in the retail market for crowdfunding, or peer-to-peer lending.
The CBN also asserted in the document that once they develop and implement a properly developed regulatory framework, ICOs could also serve as a tool for attracting foreign investment and raising capital.
Change in stance
It should be noted that the Nigerian central bank had a completely different stance when it came to cryptocurrencies.
As a matter of fact, it had gone as far as discouraging financial institutions from facilitating transactions that involved privately issued digital currencies.
However, the recently published document shows that there is a change in the stance of the Central Bank of Nigeria (CBN).
In February 2021, the CBN ordered banks to stop offering their services to crypto entities. This has resulted in the central bank being accused of taking the powers of the NSEC (Nigerian Securities and Exchange Commission).
But, this does not appear to be the case because the document shows that the NESC and CBN will work together for regulating the crypto market.
The document shows that their goal is to establish a cashless economy in Nigeria by 2025. It stated that the two authorities would work together for accomplishing their goals.
The payment aspect would come under the oversight of the Central Bank of Nigeria (CBN), but the regulatory framework would be developed by the NESC because digital tokens are a new asset class.