Nigeria is set to witness the launch of its first-ever licensed stablecoin cNGN. According to reports, the stablecoins will be licensed by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).
The launch of the country’s first compliant stablecoin could be the birth of things to come in the sector, considering the full participation of the SEC and CBN.
Stablecoins, which are pegged to fiat currencies by design, can be used to carry out transactions including remittances, payments, and trading. Although they are on the blockchain like Bitcoin, their values are usually stable, with little fees paid per transaction.
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According to a statement by a Director at cNGN, Adedeji Owonibi, the stablecoin is still undergoing a process of approval at the SEC’s regulatory incubation process.
While approval may come any time soon, Owonibi added that the stablecoin is now on licensed exchanges in Nigeria, including Quidax and Busha.
According to the developers of the stablecoin, the cNGN is expected to be a pivotal introduction into the Nigerian digital space. They feel that cNGN could help remove the cloud of uncertainty in the industry, showering a wave of regulatory clarity and financial stability in the sector.
The rollout of the stablecoin is scheduled to begin this month, with the developers mentioning that it would be available on partner exchanges and financial institutions across the country. This way, individuals and businesses can be able to leverage the stablecoin to carry out secure, fast, and efficient transactions.
Nigeria has maintained its pace globally in terms of the adoption of digital assets, with the adoption of Tether stablecoin USDT on the rise in the country.
This is largely due to the performance of the country’s currency, with most tech-savvy individuals using the stablecoin as a hedge against the falling naira.
While the Nigerian government previously launched the eNaira back in 2021 as a central bank digital currency, the design of the cNGN follows a different model.
While the eNaira was created and controlled by the CBN, cNGN is a private stablecoin, operating in a decentralized framework while still being under the country’s regulatory standards.
The Nigerian government has had mixed feelings towards digital assets and the industry, with the legislation in the industry evolving over the years.
In February 2021, the CBN announced a ban on cryptocurrency transactions, mandating financial institutions not to offer custody services to platforms and report such transactions. The premier bank cited several concerns related to fraud, money laundering, and financial instability.
The order caused a rise in the use of the peer-to-peer (P2P) system of transactions, with some exchanges making the shift.
However, things changed for the sector in December 2023, when the CBN announced the reversal of the order, allowing banks to offer services to licensed digital assets platforms.
The move signaled a positive approach to the industry, but things did not change for the users.
Meanwhile, the SEC, which had been pro-crypto for a while, introduced its incubation program to help oversee regulations for crypto projects like cNGN to ensure they are in line with the regulations of the industry.
The cNGN is expected to be tied to the naira, offering a way to make crypto remittances without the need for volatile assets.
Businesses, on the other hand, stand to gain, leveraging lower transaction fees, quicker settlements, and financial inclusion.
Meanwhile, in another Crypto Development, Ripple is about to give qualified investors a new way to get their hands on XRP without ever logging into a crypto exchange.
The company plans to launch XRP depository receipts (DRs) through Receipts Depositary Corporation (RDC) and Digital Wealth Partners (DWP).
These DRs will represent ownership of actual XRP held in custody at Anchorage, a federally regulated bank overseen by the US Office of the Comptroller of the Currency (OCC).
With the DRs, investors won’t hold XRP directly, but they’ll benefit from its price movements—just like they would with exchange-traded funds (ETFs). The key difference is that DR holders technically own the underlying XRP through a custodial setup.
The SEC determines whether a product like XRP DRs qualifies as a security using the infamous Howey Test, which measures whether an asset meets the definition of an investment contract.
Ripple will need to file Form S-1 registration statements with the SEC. These filings must include detailed information about custody, market surveillance, and risk disclosures.
They’ll need to prove that Anchorage can securely hold XRP and that investors are protected against market manipulation. The SEC will also want to know how Ripple plans to monitor XRP’s price swings and mitigate technical risks tied to its blockchain.
Approval won’t be instant. The SEC’s internal review involves enforcement staff and commissioners who vote on whether the application should pass. The current SEC split is 3-2, but with the acting chairman, the president’s chair nominee, and commissioner Hester Peirce all being pro-crypto, there’s a lot of hope.
Finally, The United States Securities and Exchange Commission (SEC) will again delay its decision on Nasdaq ICE’s application for options trading on BlackRock’s Ethereum (ETH) exchange-traded fund (ETF). It can expect to hear the SEC decision on April 25.
BlackRock’s iShares ETH Trust was among the first eight spot ETH ETFs approved by the SEC. They began trading in July. The Nasdaq ISE exchange applied for a rule change to allow options trading on the trust the same month.
Options are contracts to buy or sell an underlying asset at a certain price within a predetermined timespan. Options grant the contractor the right to make those sales, but do not require the sale.
The application was published in the Federal Register on August 12. The agency had 180 days from that point (Feb. 8) to make its decision. The SEC explained in a filing on Feb. 7 that it can delay its decision by up to 60 days after that, or until April 25.
The delay is intended to give the SEC “sufficient time to consider the proposed rule change and the issues raised therein,” it explained. The agency received two comments on the proposal in December.
In one letter, a representative of Better Markets, a nonprofit financial markets watchdog, suggested that the high volatility inherent in cryptocurrency would cause greater instability in traditional financial markets due to the greater exposure potentially provided by the ETF.
Better Markets argued that an ETH ETF would be even more detrimental to the economy due to the amount of capital tied up in the proof-of-stake consensus mechanism. Bitcoin spot ETF options trading was approved by the SEC in January 2024, and BlackRock began trading BTC ETF options in December.
Interest in ETH ETFs is abundant.
There is widespread interest in ETH ETFs. The NYSE American exchange filed for a rule change to allow it to list and trade options on the Bitwise ETH ETF, Grayscale ETH Trust, Grayscale ETH Mini Trust, and “Any Trust that Holds Ether” a day after Nasdaq’s request in regard to BlackRock.
Also on Feb. 7, the SEC released a filing requesting comment on Cboe BZX Exchange’s Feb. 3 request for a rule change it to list options trading on Fidelity’s ETH ETF. Fidelity’s spot ETH ETF was also among the first eight approved.
The SEC has not allowed options trading on any ETH ETFs so far.