By Elvis Onuigbo | February 19, 2026
Central Bank Central Bank Governor Olayemi Cardoso warns that the rapid growth of stablecoin transactions now approaching $22 billion annually in Nigeria risks undermining monetary sovereignty and destabilising the naira.
In the most forceful public statement yet from Nigeria's monetary authority on the subject of digital assets, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has issued a sweeping warning that the explosive growth of stablecoins and private digital payment platforms poses a direct threat to the country's foreign exchange stability, monetary sovereignty, and its ability to transmit monetary policy.
Speaking at the G-24 Technical Group Meetings in Abuja on Wednesday, February 19, 2026, Cardoso placed Nigeria's stablecoin challenge in a broader global context, arguing that without coordinated international frameworks, emerging market economies like Nigeria stand to lose the most — watching their currencies slowly displaced by digitally-native dollar equivalents running on blockchains that no central bank controls.
"Without coordination, digital cross-border payments risk fragmenting across jurisdictions, entrenching dominant currencies and undermining the ability of developing economies to safeguard monetary sovereignty." — CBN Governor Olayemi Cardoso, February 19, 2026
The scale of Nigeria's stablecoin exposure is not theoretical. Between July 2023 and June 2024, Nigeria processed approximately $22 billion worth of stablecoin transactions — making it the single largest stablecoin market in Sub-Saharan Africa and accounting for an estimated 43% of the region's total crypto volume. Tether's USDT and Circle's USDC dominate the space, with millions of Nigerians holding dollar-pegged digital tokens as a hedge against persistent naira weakness and high inflation.
That figure has likely climbed further into 2025 and early 2026. With inflation remaining elevated — touching 20% at points across 2025 — demand for naira alternatives has not abated. Stablecoins offer Nigerians something the formal banking system has struggled to guarantee: reliable access to dollar-equivalent purchasing power, without the queues, restrictions, and bureaucratic friction that have historically plagued official forex channels.
But from the CBN's vantage point, each naira converted to USDT is a unit of monetary sovereignty quietly walking out the door. And at $22 billion in annual volume, it is no longer a trickle.
In his address, Governor Cardoso outlined four distinct channels through which stablecoin proliferation threatens macroeconomic stability. Together, they paint a picture of a central bank increasingly worried that digital dollarisation is outrunning its regulatory reach.
The first and most immediate risk is currency substitution and weakened monetary transmission. When households and businesses transact in USDT rather than naira, the CBN's interest rate decisions — designed to cool inflation or stimulate growth — lose their grip. A rate hike that makes naira saving more attractive has little effect on an economy increasingly running on off-chain dollars.
Second is increased FX volatility and capital flow pressures. Stablecoin markets are not subject to the capital controls that govern Nigeria's official forex windows. Large, rapid movements of stablecoin holdings can create sudden demand or supply shocks in the parallel FX market, amplifying the very volatility they were originally adopted to escape. The CBN is particularly alert to episodes where global crypto market stress triggers sudden stablecoin-to-naira conversions, flooding the parallel market and pressuring the exchange rate.
"Each naira converted to USDT is a unit of monetary sovereignty quietly walking out the door. At $22 billion in annual volume, it is no longer a trickle."
Third is what the CBN describes as the systemic importance of non-bank payment providers. Platforms facilitating stablecoin transactions — cryptocurrency exchanges, peer-to-peer trading apps, and payment aggregators — are growing in size and interconnectedness, yet they fall outside the CBN's traditional supervisory perimeter. Should one of these platforms fail or face a liquidity crisis, the contagion could spread rapidly through Nigeria's digitally-connected financial ecosystem, with no lender of last resort available.
Fourth, and perhaps most structurally worrying for policymakers, is regulatory arbitrage and fragmentation. Because stablecoins operate on global blockchains, Nigerian users can access platforms incorporated in friendlier jurisdictions — effectively routing around domestic regulation. This creates an uneven playing field that penalises compliant domestic financial institutions and erodes the effectiveness of any purely national regulatory response.
There is a fundamental tension at the heart of the CBN's warning that regulators must confront honestly. Nigerians did not flock to stablecoins because they distrust the naira on principle. They turned to USDT and USDC because the official system failed to provide reliable, accessible dollar exposure during years of chronic FX shortages, multiple exchange rates, and punishing naira devaluations.
From 2021 through 2024, the naira lost more than 70% of its value against the dollar across successive devaluations and the eventual unification of exchange rates under the Tinubu administration's reform agenda. For ordinary Nigerians — freelancers earning in dollars, traders importing goods, families sending school fees abroad — stablecoins were not a luxury. They were a lifeline.
This context matters enormously for how the CBN crafts its regulatory response. An outright ban on stablecoins, or heavy-handed crackdowns on the exchanges facilitating them, risks pushing transactions further underground and eliminating the visibility that regulators currently have. Nigeria's 2021 ban on banks processing crypto transactions is a cautionary tale: it did not stop crypto adoption; it merely moved it off the formal banking rails and onto peer-to-peer networks that are even harder to monitor.
Significantly, Cardoso's February 2026 address signals a more nuanced regulatory posture than the blunt-instrument approach of earlier years. Rather than calling for bans or blanket restrictions, the CBN Governor is pushing for coordinated global frameworks — multilateral agreements that prevent regulatory arbitrage by establishing baseline rules across jurisdictions.
This aligns with Nigeria's position as an active participant in discussions at the Bank for International Settlements (BIS), the Financial Stability Board (FSB), and the G-24 grouping of developing economies. Cardoso has been consistent in arguing that emerging markets must have a seat at the table when global digital payment standards are written — otherwise, they risk having rules imposed on them that were designed for the needs of advanced economies.
Domestically, the CBN and Nigeria's Ministry of Finance established a joint task force in late 2025 to study the macroeconomic implications of stablecoin adoption and draft a framework for regulated stablecoin activity. The task force is expected to present recommendations in the second quarter of 2026. Possible outcomes include a licensed stablecoin issuance framework for compliant platforms, mandatory reporting requirements for stablecoin transactions above certain thresholds, and enhanced capital requirements for non-bank payment providers deemed systemically important.
The CBN's digital currency project — the eNaira, launched in 2021 — looms in the background of these discussions. The eNaira has yet to achieve meaningful adoption, struggling to compete with the utility and liquidity of USDT. Any regulatory framework that restricts stablecoin access without a credible, user-friendly naira-denominated alternative risks driving users away rather than toward formal financial channels.
Against this backdrop, the naira has staged a modest recovery in 2025 — appreciating approximately 7.4% year-on-year to close around N1,429 to the dollar. This improvement, driven in part by the CBN's tightening cycle and improved oil revenues, has taken some of the urgency out of naira-hedging behaviour. But it has not reversed the structural demand for dollar-denominated stores of value among Nigeria's population of over 220 million people.
Analysts caution that the naira's stabilisation remains fragile and contingent on sustained oil prices, diaspora remittance inflows, and continued orthodox monetary policy. Any renewed depreciation pressure could reignite stablecoin adoption at scale. The CBN is acutely aware that it is operating in a narrow window to establish a regulatory framework before the next period of naira stress arrives.
For the millions of Nigerians currently holding or transacting in stablecoins, the immediate practical implication of the CBN's warning is likely to be increased regulatory scrutiny of the platforms they use, rather than any abrupt disruption to access. Exchanges and payment platforms operating in Nigeria should expect more frequent compliance audits, Know Your Customer (KYC) enforcement, and transaction reporting obligations in the months ahead.
For businesses, particularly importers and exporters who use stablecoins to manage FX costs, the risk is regulatory uncertainty. A sudden shift in policy — however unlikely given the CBN's current tone — could disrupt supply chains that have quietly become reliant on digital dollar rails.
For investors and fintech entrepreneurs, the regulatory environment is entering a period of active construction. Those who engage constructively with the CBN's consultation processes and position themselves for compliance stand to benefit from the legitimacy that a formal framework would confer on licensed stablecoin activities.
"Nigeria is not trying to ban the future. It is trying to ensure that the future does not happen at the expense of Nigerian households who bear the exchange rate risk that comes with currency substitution."
The Bigger Picture: Africa's Stablecoin Frontier
Nigeria's stablecoin challenge is Africa's challenge writ large. Across the continent, dollar-pegged digital tokens are filling gaps left by underdeveloped formal financial systems, unreliable currency regimes, and expensive remittance corridors. Ghana, Kenya, South Africa, and Ethiopia are all grappling with variants of the same tension: stablecoins solve real problems for real people, while simultaneously complicating the work of central banks trying to manage monetary conditions and protect financial stability.
The CBN's decision to raise this issue at a G-24 platform reflects an understanding that national solutions are insufficient for a borderless challenge. Whether global coordination materialises quickly enough to give Nigerian regulators the tools they need — before stablecoin adoption reaches a point where any intervention becomes economically disruptive — is the central question hanging over the next phase of this debate.
What is clear is that the era of benign neglect is over. The CBN has spoken. Nigeria's stablecoin reckoning has arrived.