Nigeria’s central bank opens regulatory sandbox for digital assets

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The Central Bank of Nigeria (CBN) has announced the second cohort of its Regulatory Sandbox Programme, with a dual-track structure designed to support emerging technologies while upholding high standards of consumer protection, financial stability, and market integrity.

The program, which opened for applications on August 12, 2026, and closes on August 31, 2026, will run under two dedicated tracks: the “Virtual Asset Service Provider (VASP) Track” and the “Data-Enabled Financial Services Track.”

The VASP track aims to support innovative virtual asset, stablecoin, payment, settlement, custody, wallet, and related financial infrastructure solutions that require supervised live testing; while the data-enabled financial services (non-VASP) track aims to support innovations that leverage secure digital infrastructure and permission-based data sharing to improve financial inclusion, payments, credit, risk management, operational efficiency, and consumer outcomes.

In a statement signed by Hakama Sidi Ali, acting director of Corporate Communications and Investor Relations Department at the CBN, the CBN invited eligible innovators, financial institutions, VASPs, financial technology companies, and technology companies to apply to participate in the program.

Applications will be assessed based on the level of innovation, readiness for controlled live testing, potential consumer or market benefit, governance arrangements, risk management capability, and the suitability of the proposed testing plan, according to the central bank.

“The CBN Regulatory Sandbox provides a controlled environment in which eligible participants may test innovative financial products, services, business models, and enabling technologies under the supervision of the Central Bank,” the CBN said. “The programme enables the CBN and innovators to engage constructively throughout the testing process, supporting regulatory learning while encouraging responsible innovation that benefits consumers and the wider financial system.”

The successful participants in the second cohort will undertake supervised testing within clearly defined parameters such as appropriate safeguards for consumer protection, operational resilience, cybersecurity, and regulatory reporting.

The CBN underscored, however, that participation in the Regulatory Sandbox does not constitute a license, authorization, or approval to operate outside the approved testing parameters.

Nigeria embracing digital assets

Nigeria has the highest rate of digital asset adoption in Africa and ranks sixth in the world—behind only India, the United States, Pakistan, Vietnam, and Brazil—based on a 2025 report from blockchain analysis firm Chainalysis.

“The message from there is that the Central Bank Governor, the Ministry of Finance, and others reached a general consensus on the need to support innovation and ensure it continues. By no means does anybody want to stifle innovation,” Olayemi Cardoso, governor of the CBN, told reporters at the annual IMF and World Bank meetings in Washington.

However, he added that “there is also a need to balance this with the risks involved in these new technologies and digital currencies.”

Regarding risks, this August, the CBN revealed that Nigerians lost ₦25.85 billion (US$18.85 million) to digital payment fraud in 2025. While this was a significant decline from the ₦52.26 billion (US$38.38 million) recorded in 2024, the CBN warned that systemic risks, interoperability failures, and a surge in targeted cyberattacks mean the country’s payment infrastructure remains dangerously exposed.

The CBN cautioned Nigerians to be on guard against cyberattacks—such as ransomware, data breaches, and credential theft—and not to transact with unlicensed payment companies, as these entities are not protected by existing regulatory safeguards and could facilitate illicit financial activities.

“Banking and fintech institutions remained prime targets for ransomware, data leaks, and credential theft,” said the CBN. “Cyber threats in Nigeria are no longer random cybercrimes, but increasingly targeted, organised, and identity-driven campaigns.”

In addition, the CBN expressed concerns about the concentration of payment activities among “systemically important” Payment Service Providers (PSPs), suggesting that operational failures involving them could trigger a “domino effect,” resulting in financial system disruption as insolvency or operational glitches spread from one PSP to another. To this end, opening up the regulatory sandbox to digital assets marks another step towards achieving the safe, robust market that the central bank and others in Nigeria envision.

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