The Naira Stablecoin Receives Approval from the Central Bank of Nigeria for 2024
On Jan 4, the Africa Stablecoin Consortium disclosed that they are working on a Naira Stable Coin, in partnership with the Central Bank of Nigeria, this was wild and made so many rounds within Africa, especially in Nigeria known for its large population, the largest in Africa and the business hub of the African continent.
This contradicted the stance of the past administration on cryptocurrencies in 2021 where it banned Financial institutions from participating in the asset or providing banking services to businesses or individuals who trade in crypto, at some point blocking bank accounts of those found liable. The ban did not stop Nigerians from being involved, rather, it gave rise to an astronomical growth in p2p (Peer To Peer) trade on platforms such as Cashwyre, Binance, and other Bitcoin/Crypto platforms/exchanges.
Naira Stablecoins
There have been several attempts to float a cryptocurrency pegged to the Naira on a 1:1 ratio. The latest development occurred in 2019 with the introduction of NGNT by the Token Mint consortium. Comprising prominent Nigerian crypto exchanges and African communities such as Helicarrier and Busha, NGNT is pegged 1:1 to the Naira. It is accessible on both the Binance Smart Chain and the Ethereum Network, adopting the formats of BEP-20 and ERC-20 tokens, respectively.
The New Naira Stablecoin (cNGN)
The Naira Stable Coin (aka the Compliant Naira Stable) cNGN proposes that it will be held by Nigerian banks which makes it different from the other previous attempts to a Naira stablecoin. It is worth noting that this coin will also be pegged 1:1 to the Naira.
The consortium comprises major Nigerian tier-1 banks, including First Bank, Access Bank, Sterling Bank, and Providus Bank, as well as payment companies such as Budpay, Kora (formerly KoraPay), and Interswitch. Additionally, blockchain consultants Convexity and Interstellar are key partners. The proposed cNGN stablecoin, akin to existing stablecoins, will streamline the international transfer of NGN.
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How is cNGN different from eNaira
There are several noteworthy distinctions between the eNaira and cNGN. Firstly, unlike the eNaira, the cNGN will function as a cryptocurrency, similar to other stablecoins, rather than a Central Bank Digital Currency (CBDC). The consortium will oversee and maintain the cNGN, which will be under the ownership of the banks within the consortium. The CBN unlike the eNaira, will not have control over the cNGN, this will be custodied by the tier-1 banks in Naira but regulated by the Central Bank.
Bitcoin vs cNGN, which way to go
With the rate at which the Naira is losing its purchasing power, the multi-million Bitcoin question is, would Nigerians want to store their values in a currency that is pegged to the Naira, 1:1? What will make a hard-working, tax-paying Nigerian want to preserve their wealth in a currency that is losing its value every year? That is a big question.
For more on Why you should save in Bitcoin, click here.
In summary: The Central Bank has given greenlight to cryptocurrencies and working on its own cryptocurrency, this is positive, however, you as an individual will need to decide if you will want to store your value in it despite the rate at which it is being devalued. We at Cashwyre, we choose to Save in Bitcoin as it has outperformed ALL currencies globally.