It’s Not the Coin, It’s What You Do With It: Stablecoins and Nigerian Law

Stablecoins Are No Longer Just a Crypto Question

Stablecoins have, over the years, come to form part of our average daily transactions in Nigeria. Unlike in previous years, we have now seen a shift from outright disapproval to an approval that comes with caution. In Nigeria, many users are now utilising stablecoins, particularly for cross-border transactions, payments, savings and the movement of value across jurisdictions.

This growing use, however, raises a question that goes beyond whether stablecoins are “crypto” or not. For businesses, the more important question is how stablecoin transactions fit within Nigeria’s existing regulatory framework. A business that wishes to accept payment in stablecoins, facilitate stablecoin transfers, or use stablecoins for cross-border payments may be engaging with multiple regulatory regimes, depending on the nature of the transaction, the parties involved and the services being provided.

This is particularly relevant as Nigerian regulators have increasingly moved towards a more structured approach to digital assets. The regulatory conversation is no longer simply about whether digital assets should be permitted, but about who may provide digital asset services, how those services should be conducted, and where the boundaries lie between regulated financial services, digital asset activities and ordinary commercial transactions. This distinction is increasingly important as regulators have begun to create specific frameworks for testing and supervising virtual asset and stablecoin-related activities.

For businesses, this creates a practical compliance question: if stablecoins are becoming a tool for moving and receiving value, what does the regulatory framework require before a business can legitimately use them as part of its payment or commercial operations?

This article considers that question from a Nigerian regulatory perspective, focusing on the practical implications for businesses seeking to incorporate stablecoins into their payment, settlement and cross-border transactions.

How Are Stablecoins Treated Under Nigerian Law?

The legal treatment of stablecoins in Nigeria has evolved considerably. The Central Bank of Nigeria (CBN) has, for some time, recognised the need to develop a regulatory framework for stablecoins. Under its Payments System Vision 2025, the CBN identified the development of a regulatory framework for the potential implementation of stablecoins as one of the emerging areas within Nigeria’s payments ecosystem.

The regulatory position has since moved further towards structured oversight. In December 2023, the CBN issued its Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs), replacing the earlier restrictions that prevented banks and other financial institutions from maintaining relationships with cryptocurrency businesses. The Guidelines permit regulated VASPs to maintain designated banking relationships, subject to the applicable requirements. However, banks and other financial institutions remain prohibited from holding, trading or transacting in virtual currencies on their own account.

The CBN’s more recent regulatory approach also expressly contemplates stablecoin-related activities. Under its Regulatory Sandbox, the CBN has established a dedicated Virtual A

sset and Stablecoin Financial Services track for controlled testing of virtual asset and stablecoin solutions. Eligible use cases include fiat-backed stablecoin payments and settlement, stablecoin issuance, virtual asset payments, digital wallets, custody solutions, fiat on- and off-ramp services, and exchanges involving stablecoins or payment tokens. The Sandbox is, however, a controlled testing environment and admission does not constitute a general licence or authorisation to operate outside the approved testing parameters.

At the same time, the Securities and Exchange Commission (SEC) regulates relevant digital asset activities and Virtual Asset Service Providers, while the CBN’s regulatory remit remains particularly relevant where a stablecoin product intersects with payments, settlement, banking, foreign exchange or other activities within the CBN’s mandate. The SEC’s digital asset framework covers activities including the exchange and transfer of virtual assets, custody and other virtual-asset services, while its current regulatory architecture also provides for the Accelerated Regulatory Incubation Programme (ARIP) for eligible VASPs and other digital-asset businesses.

A stablecoin may be the instrument through which value is transferred, but the regulatory treatment will depend substantially on the nature of the service being provided, the parties involv

ed and whether the transaction falls within the regulatory perimeter of the CBN, SEC or another relevant authority.

Beyond the Theory: Your Stablecoin Questions, Answered

• Can a Nigerian Business Pay Its Vendor in Stablecoins?

A Nigerian business can pay its vendor in stablecoins. However, the business should consider the nature of the transaction, the parties involved and whether the payment structure brings the business within a regulated digital-asset or payment activity. Appropriate contractual, tax, AML/CFT and record-keeping controls should also be considered.

• Can stablecoins be used for cross-border payments?

Stablecoins can facilitate the transfer of value across borders, but their use does not automatically remove Nigeria’s foreign exchange and payment regulations. Where a transaction involves the movement of funds across borders, businesses should consider applicable CBN requirements and use appropriately licensed providers where required.

• What regulatory risks arise when a business accepts stablecoins?

Key regulatory risks include AML/CFT and KYC obligations, sanctions screening, source-of-funds concerns, tax and accounting treatment, wallet/custody risks, and potential licensing requirements where the business is doing more than simply receiving payment for its own goods or services. Businesses should also consider the legal and operational risks associated with the particular stablecoin, including the credibility of its issuer, the arrangements for redeeming the stablecoin, its liquidity, and the possibility that it may lose its intended value.

• Does receiving stablecoins amount to operating a virtual asset business?

Merely accepting stablecoins as consideration for goods or services does not, by itself, mean that a business is operating as a VASP. The position may be different where the business facilitates transactions for third parties, exchanges stablecoins, provides custody or wallets, or otherwise provides regulated virtual-asset services.

• What happens when a stablecoin transaction involves conversion into Naira?

Conversion into Naira introduces an additional regulatory consideration. Depending on how the conversion is structured, it may involve regulated exchange, payment or on/off-ramp activities. Businesses should therefore avoid informal conversion arrangements and consider using appropriately authorised service providers.

Conclusion

Stablecoins are increasingly becoming a practical tool for payments and the movement of value, particularly in cross-border transactions. For Nigerian businesses, however, their growing utility does not mean that existing regulatory requirements cease to apply.

The key consideration is how the stablecoin is being used. A business receiving stablecoins for its own goods or services may face different obligations from a business facilitating stablecoin transfers, providing custody, operating an exchange or converting stablecoins into Naira for customers.

Businesses considering stablecoin transactions should therefore assess the regulatory implications of their proposed structure before implementation, particularly where the transaction involves cross-border payments, conversion into Naira or services provided to third parties. The objective is not to avoid the use of stablecoins, but to ensure that their use is supported by an appropriate regulatory, contractual, and compliance framework.

AUTHORS

Awuese Iorchor, CIPP/E & Esosa Aibueku,

Associates – Hamu Legal