The International Monetary Fund (IMF) has cautioned that the growing adoption of U.S. dollar-denominated stablecoins in Nigeria could weaken demand for the naira and reduce the effectiveness of the country’s monetary policy.
In a report titled “Stablecoins in Nigeria: A Growing Cross-Border Channel,” the IMF noted that an increasing number of Nigerians are turning to dollar-pegged digital assets for payments, remittances, and savings amid inflationary pressures, foreign exchange shortages, and naira depreciation.
According to the Fund, the widespread use of stablecoins could create a form of digital dollarization, as more transactions and savings migrate from the local currency to digital assets linked to the U.S. dollar. This trend, it warned, may limit the ability of the Central Bank of Nigeria (CBN) to influence economic activity through interest rate adjustments and exchange rate policies.
The IMF highlighted Nigeria’s position as one of the world’s leading crypto markets, revealing that the country recorded approximately $59 billion in crypto-asset inflows between July 2023 and June 2024. Nigeria also accounts for nearly 60 percent of all stablecoin inflows into Sub-Saharan Africa since 2019.
While acknowledging that stablecoins offer faster and cheaper alternatives for cross-border payments and remittances, the Fund expressed concerns about regulatory oversight, potential blind spots in financial monitoring, and vulnerabilities to money laundering and illicit financial flows.
Rather than imposing outright restrictions, the IMF recommended a balanced regulatory approach that includes maintaining a stable and credible naira, strengthening oversight of stablecoin issuers, improving blockchain-based transaction monitoring, and enhancing the efficiency of regulated payment systems.
The Fund emphasized that addressing the economic conditions driving stablecoin adoption remains critical to preserving monetary stability while supporting financial innovation.
