The IMF has spoken. Can Nigeria regulate stablecoins without killing them?, By Shuaib S Agaka

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The greater challenge is creating a framework that protects users without stifling innovation, combats illicit activity without discouraging legitimate use, and strengthens confidence without undermining the technological progress that has made Nigeria one of Africa’s leading digital economies… Nigeria is no longer deciding whether stablecoins matter. That question has already been answered by millions of users.

A few years ago, cryptocurrencies occupied the fringes of Nigeria’s financial system. They were associated largely with traders, technology enthusiasts, and some young risk-takers willing to experiment with emerging financial tools. Today, that reality has changed dramatically.

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I have associates who are freelancers and who receive their salaries in stablecoins, entrepreneurs who pay foreign suppliers through digital assets, and young professionals who quietly keep part of their savings in USDT, rather than in naira accounts. For many of them, stablecoins are no longer speculative investments. They have become practical financial instruments for everyday life.

This growing adoption explains why the International Monetary Fund’s recent recommendation that Nigeria should place stablecoins and other crypto assets under formal regulatory oversight deserves serious attention. The IMF’s call is not simply another warning about cryptocurrencies. It is recognition that digital assets have become significant enough to warrant inclusion in discussions about financial stability, monetary policy, and economic governance.

The IMF’s concerns are coming at a time when Nigeria’s cryptocurrency market has become one of the largest in the world. Over the years, the country has consistently ranked among the leading nations in global crypto adoption. According to blockchain analytics firm, Chainalysis, Nigeria recorded $95.5 billion in crypto transaction volume between 2020 and 2026.

The reasons behind this growth are not difficult to understand.

For much of the past decade, Nigerians have navigated periods of high inflation, foreign exchange shortages, and currency depreciation. Businesses have struggled to access foreign currency for imports. Freelancers working for international clients have often faced payment challenges.

In response to these challenges, stablecoins emerged as a practical solution for many users.

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Unlike cryptocurrencies such as Bitcoin, whose prices fluctuate significantly, stablecoins are designed to maintain a relatively stable value by being pegged to assets such as the United States dollar. To many Nigerians, a stablecoin wallet effectively functions as a digital dollar account that can be accessed without the restrictions associated with traditional banking systems.

As a result, adoption has expanded far beyond the small community of early crypto enthusiasts.

Recent surveys have highlighted just how widespread this trend has become. Studies by BVNK, Artemis, and YouGov found that around 80 per cent of Nigerian crypto users already hold stablecoins, and 95 per cent of respondents expressed a preference for receiving payments in stablecoins rather than the local currency. Such findings suggest that digital dollar-denominated assets are no longer niche products. They are increasingly becoming part of everyday financial activity.

Yet, the IMF’s concerns are not without merit.

Across the world, governments are grappling with how to regulate an industry that evolves faster than conventional policymaking processes. The European Union has introduced comprehensive crypto regulations through its Markets in Crypto-Assets framework. The United States is actively debating stablecoin-specific legislation. Financial centres in Asia are also developing dedicated regulatory structures for digital asset providers.

As stablecoin adoption expands, so too do potential risks. Large-scale movement of funds into dollar-backed digital assets could reduce the effectiveness of monetary policy and increase currency substitution. Regulators also worry about money laundering, terrorist financing, consumer protection, and the possibility of illicit financial flows moving beyond the reach of traditional oversight mechanisms.

Importantly, these concerns are not unique to Nigeria.

Across the world, governments are grappling with how to regulate an industry that evolves faster than conventional policymaking processes. The European Union has introduced comprehensive crypto regulations through its Markets in Crypto-Assets framework. The United States is actively debating stablecoin-specific legislation. Financial centres in Asia are also developing dedicated regulatory structures for digital asset providers.

The global conversation has therefore shifted. The question is no longer whether stablecoins should be regulated. The real debate is how to regulate them without undermining the benefits that have driven adoption in the first place.

Although Nigeria itself has not been standing still, the country’s approach to cryptocurrencies has evolved considerably since the Central Bank of Nigeria’s controversial restrictions on banking relationships with crypto businesses in 2021. Those measures did not eliminate crypto activity. Instead, peer-to-peer transactions flourished as users sought alternative ways to access digital assets.

The lessons from that period appear to have influenced subsequent policy decisions.

Since then, regulators have gradually moved towards a more structured approach. The Securities and Exchange Commission has developed frameworks for digital asset operators, while initiatives such as the cNGN stablecoin project demonstrate growing interest in creating regulated alternatives within the digital finance ecosystem.

This shift reflects a broader recognition that outright resistance is unlikely to succeed in a technology-driven environment. Innovation tends to find pathways around restrictions when there is strong demand. Effective regulation, therefore, requires engagement rather than prohibition.

However, creating an effective regulatory framework will require more than the involvement of financial regulators alone.

The conversation is often framed as purely a central bank or securities commission issue. That is incomplete.

The National Information Technology Development Agency (NITDA) plays a critical supporting role in shaping Nigeria’s digital ecosystem. While it does not regulate financial assets directly, it influences the infrastructure and governance environment in which digital finance operates.

The IMF is right to argue that a rapidly growing segment of the financial system cannot remain outside regulatory oversight indefinitely. Consumer protection, financial integrity, and systemic stability are legitimate public interests that governments must safeguard.

This is important because the challenge before policymakers is not merely financial. It is technological. Understanding blockchain systems, stablecoin architecture, cybersecurity risks and digital identity requirements demands expertise that extends beyond traditional financial supervision. Collaboration between financial regulators, technology agencies and industry stakeholders will therefore be critical.

At the same time, policymakers must avoid a common mistake that has affected technology regulation in many jurisdictions. Excessive restrictions can push legitimate activity into informal channels, making oversight even more difficult. Nigeria’s experience following the 2021 restrictions offers a useful lesson.

Ultimately, the stablecoin debate is about trust.

Millions of Nigerians did not adopt stablecoins because regulators encouraged them to do so. They adopted them because these digital assets addressed real economic challenges. They offered easier access to international payments, faster cross-border transfers, and a perceived hedge against currency volatility.

That reality is precisely why policymakers must approach regulation with care.

The IMF is right to argue that a rapidly growing segment of the financial system cannot remain outside regulatory oversight indefinitely. Consumer protection, financial integrity, and systemic stability are legitimate public interests that governments must safeguard.

However, regulation alone will not determine the future of stablecoins in Nigeria.

The greater challenge is creating a framework that protects users without stifling innovation, combats illicit activity without discouraging legitimate use, and strengthens confidence without undermining the technological progress that has made Nigeria one of Africa’s leading digital economies.

Nigeria is no longer deciding whether stablecoins matter. That question has already been answered by millions of users.

The real test now is whether regulation can catch up with reality.

Shuaib S Agaka is a tech journalist and digital policy analyst based in Kano.