IMF: Nigeria drew $59bn in stablecoin flows, naira at risk

The International Monetary Fund reported that Nigeria attracted roughly $59 billion in crypto inflows between July 2023 and June 2024, capturing about 60% of sub‑Saharan Africa’s stablecoin traffic. The fund warned that growing use of U.S. dollar‑pegged stablecoins could reduce demand for the naira.

In a June 16 report, the IMF described increasing use of dollar‑linked stablecoins by small businesses and households in Nigeria to move money across borders and to hold value outside the local currency. The report identified high remittance costs and a volatile naira as primary drivers of the shift.

The IMF cited World Bank data showing average remittance costs to sub‑Saharan Africa of about 9% on a $200 transfer, compared with a global average near 6%. Stablecoins allow near‑instant transfers via smartphones and digital wallets at a fraction of those fees, the report said.

The fund noted that stablecoins have moved from a niche market to a major payments corridor in Nigeria. Users employ dollar‑pegged tokens both for cross‑border payments and as a way to protect savings and receivables from naira depreciation.

The IMF identified policy challenges linked to rapid adoption. A shift of transactions and savings into dollar stablecoins could reduce demand for the naira and weaken the central bank’s ability to influence money supply and inflation. The use of private digital wallets for payments can complicate oversight and increase risks of illicit financial flows and financing for violent extremism, the report added.

Lawmakers have responded with proposed regulation. The Nigerian Senate advanced a cryptocurrency licensing bill to its Committee on Capital Market for a four‑week review after passing a second reading by majority voice vote. The draft law would require licensing for digital asset exchanges and introduce investor protections.

The report referenced a 2021 directive from the Central Bank of Nigeria under then‑governor Godwin Emefiele that pushed many crypto transactions into opaque, informal channels and hindered institutional development. Industry participants and bill sponsors said clearer rules could return trading to regulated platforms and support market growth.

The IMF recommended that regulation address macroeconomic and security implications of widespread stablecoin use, including measures to preserve monetary control and to strengthen anti‑money‑laundering and counter‑terrorist financing frameworks.