Since its February 5, 2021, directive prohibiting financial institutions from facilitating payments using cryptocurrencies, the Central Bank of Nigeria has maintained an uncompromising stance on the subject.
Even with the NITDA adopting blockchain technology, this position has not changed despite the eNaira’s Central Bank Digital Currency (CBDC) debut appearing to be a failure. But may things be changing for the better now?
Adedeji Owonibi, the founder and COO of Convexity, stated during the Digital Assets Summit organized by SiBAN in Abuja, the capital of Nigeria, that the CBN wants to see the introduction of a stablecoin based on the naira in the nation.
A particular kind of cryptocurrency intended to maintain a consistent value is known as a stablecoin. Depending on how it is made, its value is frequently associated with a specific asset type.
Stablecoins may be classified into four categories: algorithmic (managed by smart contracts), crypto-collateralized (backed by other cryptocurrencies), fiat-collateralized (backed by conventional money), and commodity-collateralized (backed by tangible commodities like gold).
Among the most well-known stablecoins are USDT, USDC, DAI, TrueUSD, USDD, and others. USDT has the highest market capitalization as of September 7, 2023, surpassing $80 billion.
Adedeji noted that at the moment, Nigerians are increasingly using stablecoins connected to the US dollar for financial transactions, notably USDT while discussing the project and the reasons the CBN is interested.
This is because it makes it easy to move money between African countries, such as from Nigeria to Ghana.
He said that the performance of these international stablecoins has caught the attention of the Central Bank of Nigeria. He pointed out that in 2021 when it ordered all commercial banks to stop doing transactions using cryptocurrencies, the central bank had a negative first reaction to them.
However, he pointed out that the Central Bank is investigating a stablecoin project with Convexity in order to support the Nigerian crypto market, which is among the largest in the world in terms of consumers.
Collaboration, Finance, and Security
Adedeji also said that although there is a great deal of enthusiasm for developing a stablecoin project and supporting other blockchain-based goods for Nigerians, authorities have difficulty comprehending the technology.
He emphasized that prior to creating safe goods for user involvement, it is crucial to understand the technology.
He said that this issue is being aggressively addressed by professionals and regulators from the CBN, NCC, and other government agencies.
Security remains a top priority despite the industry’s advancement, according to the blockchain forensic specialist. It’s crucial to create cutting-edge solutions with strong security measures.
However, in order to accomplish this level of protection, enough cash is needed. Budget restrictions are a significant problem for startups when tackling these issues.
He mentioned Convexity’s efforts to offer entrepreneurs much-needed financial help as a means of bridging this divide.
He also exhorted the government to come up with novel ways to assist these young innovators, who are essential to determining the country’s technological future.
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