Recent research reveals plans for Nigeria’s central bank to establish a regulatory framework for stable currencies in the future. These currencies are intended to replace fiat currency and eliminate price volatility. The research also establishes how ICOs can become a new way to attract foreign direct investment and raise capital.
A successful payment system is necessary for the proper functioning of a currency.
The Central Bank of Nigeria recently unveiled a document outlining its proposed payment system. Titled “Proposed Payment System,” the CBN used it to explain its current monolithic payment system and plan for the implementation of a stable currency. The bank states that the implementation of a stable currency is likely to be a successful form of payment; therefore, they believe that the creation of a regulatory framework is needed.
A paper from the Central Bank of Nigeria discusses the regulations needed to regain investor interest in launching initial coin offerings. This is because CBN’s Nigeria Payments System 2025 Vision also states that stable coin implementations will be created. The CBN has stressed the importance of regulating ICOs because they play a key role in funding these projects.
The current lack of regulation surrounding ICOs currently impedes any interest in taking their idea further. However, the potential of ICOs as an asset class provides the basis to support a new form of fundraising. This would enable crowdfunding or peer-to-peer lending on a wholesale basis, or retail lending through ICOs, according to the paper provided.
A supporting paper notes that the implementation of a proper governance body leads to new ways of attracting foreign investment through ICOs and equity.
Create and enforce regulations for Initial Coin Offerings.
The CBN recently changed its view on privately issued digital currencies. They previously discouraged financial institutions from working with these currencies due to the unstable nature of their value.
Nigeria’s CBN claimed authority over cryptocurrencies in February 2021. Many critics suspected that the bank took power away from NSEC. A CBN and NSEC research paper predicted a cashless economy by 2025. The two agencies planned to simultaneously regulate digital currencies.
The paper clarified that the Sec regulates tokens because they are a new financial asset class. In addition, the CBN would handle payments related to these new assets.