CBN Approves Africa Stablecoin Consortium to Test cNGN Stablecoin Intending to Enhance the eNaira
Summary:
The Central Bank of Nigeria has sanctioned the Africa Stablecoin Consortium to test its cNGN stablecoin in a regulatory sandbox, set for launch on February 27, 2024. The Consortium, a collaboration between Nigerian banks and fintech firms, confirms that the cNGN meets all regulatory standards. This stablecoin, designed to augment the eNaira rather than replace it, is interoperable with key blockchains and matches the value of the Nigerian Naira. Its primary aim is to facilitate swift money transfers from Nigerians overseas, bypassing traditional wait times and high fees. Unlike the eNaira, the cNGN will function on public blockchains.
The Africa Stablecoin Consortium (ASC), backed by the Central Bank of Nigeria (CBN), has been authorized to test its cNGN stablecoin in the bank's regulatory sandbox, with a release date set for February 27, 2024. According to the joint announcement by Nigerian banks and fintech companies that form the Consortium, the cNGN stablecoin meets the compliance protocols put in place by the CBN, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU). These regulators are actively engaged to ensure adherence to guidelines, consumer rights, and transparency.
The intention for the cNGN is to augment, not replace, the eNaira, which is overseen directly by the CBN. The cNGN, on the other hand, will be managed by the Africa Stablecoin Consortium. Currently, it operates seamlessly with key blockchain networks like Bantu and BNB Smart Chain, with an expansion to all significant blockchain platforms in the pipeline.
As revealed in the release, the cNGN token maintains a value equal to the Nigerian naira, the country's official currency, and is financially supported by Naira reserves held in specified commercial banks. The main objective of the stablecoin is to streamline the connection between the Nigerian Naira and worldwide digital currencies by employing blockchain technology.
The primary function of the cNGN is to expedite the transfer of money from Nigerians living overseas to their families in Nigeria, bypassing the typical waiting period for remittances and evading the high fees charged by conventional international transactions.
In stark contrast to the eNaira digital currency overseen by the central bank, the new stablecoin will be developed on public blockchains like Bantu, Polygon, Ethereum, BNB Smart Chain, and Tron. The cNGN, like other well-established stablecoins, offers compatibility with a variety of public blockchains, thus enabling global transfers and expanding its international usability. Based on an update, the CBN is keen to promote blockchain technology support within the financial system. In a notice sent to banks on December 22, the CBN acknowledged the growing international interest and usage of cryptocurrency, subsequently lifting restrictions on Nigerian banks' ability to process cryptocurrency transactions.
Published At
1/5/2024 11:59:15 AM
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