Africa’s first regulated stablecoin hits milestone

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In February, cNGN, Africa’s first regulated stablecoin, launched as the region’s homegrown response to the rapid surge in stablecoin adoption globally. Since then, it has expanded to payments, DeFi, and GameFi ecosystems, hitting new milestones. And as it now tells CoinGeek, it’s eyeing expansion into new chains, markets, and countries.

“The reception has been strong,” it says. cNGN was launched by the African Stablecoin Consortium, which comprises Nigerian fintechs, including Abuja-based blockchain solutions firm Convexity and Lagos-based IT firm Alpha Geek.

“Since launch, we’ve seen steady growth in adoption, with over $2.5 million in transaction volume recorded across supported chains and platforms.”

Africa’s stablecoin boom

Africa has recorded a massive surge in stablecoin adoption over the past two years. While these tokens were previously used almost exclusively in digital currency trading circles, they have expanded into payments and cross-border payments.

A recent report by the pan-African exchange Yellow Card revealed that Sub-Saharan Africa’s 9.3% adoption rate was the highest globally, with Nigeria’s 26 million users (12% of the population) also being the world’s highest.

However, like in every other region, Africa’s stablecoin scene is dominated by offshore U.S. dollar-pegged stablecoins like Tether’s USDT and Circle’s (NASDAQ: CRCL) USDC.

This dominance looks set to continue. A month ago, Yellow Card signed an agreement with Circle to promote the adoption of its stablecoin in over 20 African countries where the exchange operates. In May, South African fintech firm Onafriq signed a similar partnership with Circle, which could ultimately provide stablecoin to 200 million bank accounts across 40 countries.

Despite the dominance, African countries continue to face unique challenges that can only be solved through locally-tailored solutions, and this is what cNGN offers its users.

The stablecoin has attracted the interest of developers, fintechs and blockchain communities, and beyond, it tells us. cNGN is being integrated into decentralized applications and money markets, GameFi ecosystems, on-chain swaps and conversions, merchant payments, and financial tooling.

Future expansion plans

Nigeria has maintained its position as Africa’s largest digital asset market for years. Last year’s Chainalysis’ Crypto Adoption Index ranked it only behind India globally. This gives cNGN massive room for local expansion, and it says that this remains its top priority.

“Our immediate focus is on deepening liquidity, expanding utility through trusted ecosystem partners, and ensuring ubiquity across both Web2 and Web3 environments. cNGN will be made available on more chains, based on use cases, and we’re working towards responsible integrations with regulated financial infrastructure and partners.”

However, the ASC is engaging with partners in other African countries who are interested in replicating Nigeria’s regulatory model for fiat-backed tokens. The consortium is highly selective of potential partners, as most regulatory models in the region are still undeveloped and have no clear policies for local stablecoins.

Any partnership would focus on backing the stablecoin with the local currency and must be fully compliant with local regulations, it added.

Overcoming the challenges

Being the first regulated stablecoin in Africa, cNGN was navigating uncharted waters, facing unique challenges to quickly solve to compete with the dominant offshore rivals.

One of these was limited, user-friendly, and widely available on- and off-ramps. The digital asset ecosystem has long been ostracized by legacy finance. In Nigeria, commercial banks had been barred from processing the sector’s transactions for years. And while the directive has since been overturned, most banks and fintechs remain wary of a regulatory crackdown.

“However, that gap is closing fast as more ecosystem participants—wallet providers, fintechs, and developer platforms—are building solutions to make access easier and more seamless,” cNGN says.

On the regulatory front, cNGN has fared better than most Nigerian VASPs. The stablecoin was developed under the SEC’s Regulatory Incubation Framework, and “we’ve worked closely with the Commission every step of the way.”

The Investments and Securities Act (2024), signed into law by President Bola Tinubu three months ago, further clarified digital asset regulations in the West African country.

Still, there’s room for improvement, cNGN says, “especially around tax treatment, FX-related guidance, and operational licensing timelines.”

“This is just the beginning. cNGN is proving that it’s possible to build a stablecoin model that is compliant, programmable, and commercially viable, without sacrificing trust or local relevance…we’re building the foundation for a regulated digital value layer that can scale across use cases—and ultimately across borders.”

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