NIGERIA Law and Practice Contributed by: Omoruyi Edoigiawerie, Adebomi Adekeye and Habeeb Eyinade, EandC Legal
6. Payments and Stablecoins 6.1 Payments
Stablecoins These are digital assets intended to maintain a stable value relative to a reference asset. Under the ISA 2025, they are classified as securities rather than currency. Algorithmic stablecoins These are crypto-assets that utilise smart contracts and supply-adjustment formulas (rebase or mint-and- burn) to maintain a peg without 1:1 fiat reserves. While fiat-backed stablecoins (eg, cNGN) require 1:1 naira reserves held with a CBN-regulated bank, algo- rithmic stablecoins lack centralised backing. Risk categorisation The SEC Rules (amended 2025) categorise algorith- mic stablecoins as “High-Risk Innovative Products”. Issuers must provide an exhaustive technical audit of the stability algorithm in their White Paper. Consumer protection Unlike fiat or 1:1 backed coins, algorithmic tokens are subject to stricter conduct-of-business rules under the ISA 2025. Promoting them as guaranteed sta- ble without disclosing the risk of de-pegging carries administrative fines exceeding NGN20 million. 6.2.2 Stablecoin Regulation Nigeria regulates fiat-backed stablecoins through a bespoke statutory framework centred on the ISA 2025 and the SEC Rules on Digital Assets (as amended in June 2025). The 2026 Regulatory Landscape Regulatory Distinctions Reserve requirements Under Section 357 of the ISA 2025, all stablecoins, including fiat-backed, are classified as securities. This places them under the exclusive jurisdiction of the SEC rather than the traditional payments framework. Issuers must maintain 1:1 reserves in the pegged fiat currency (eg, naira or US dollar) within SEC-approved custodial accounts. Monthly independent attestations and quarterly SEC audits are mandatory to verify reserve adequacy.
Crypto-assets are not recognised as legal tender in Nigeria. Under the Central Bank of Nigeria (CBN) Act, the Naira remains the only official currency for the set- tlement of public and private debts. Regulatory Framework While not legal tender, crypto-payments are permit- ted as contractual settlements between consenting parties, provided they occur within the regulated eco- system: • all commercial transactions involving digital assets must be facilitated by an SEC-registered VASP; and • while the CBN’s 2023 guidelines allow banks to provide accounts to licensed VASPs, financial institutions remain prohibited from holding, trad- ing or transacting in crypto-assets on their own portfolios. Taxation and Compliance The Nigeria Tax Act 2025 treats every crypto-to-fiat or crypto-to-crypto payment as a chargeable event. Gains from payments are subject to personal or cor- porate income tax (CIT) at rates up to 25%, replacing the previous flat capital gains tax. 7.5% VAT applies to the transaction fees charged by the facilitating plat- forms. VASPs are mandated to report transaction data to the NRS to ensure AML and tax compliance. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins Nigerian regulators maintain a sharp distinction between fiat currency and stablecoins, further differ- entiating algorithmic variants based on their stability mechanisms. Definitions Fiat currency This is legally defined under the CBN Act 2007 as government-issued money (the naira) that serves as sole legal tender for all public and private debts.
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