Nigeria Bans Stablecoin Returns and Requires ‘Form M’ for Import Payments
Key Facts
The Central Bank of Nigeria has barred stablecoin issuers from paying or arranging interest or returns for holders, and required import payments made with Category II stablecoins to be documented with a valid “Form M.” The bank issued the regulation on November 5, 2026, and it took effect the same day. The rules govern the issuance and use of stablecoins in domestic and cross-border transactions, including foreign currency-linked trade payments. The text prohibits issuers from paying, offering, arranging or facilitating interest, profits, returns or any financial benefit in exchange for holding or depositing the coin. It also bars service providers from being used to circumvent the ban, with violations punishable by a fine equal to twice the value of the prohibited benefit.
Under the rule for imports, the licensed entity executing the payment must record the “Form M” reference and verify that it is valid. The amount must go to the foreign supplier or its virtual asset service provider, as specified by the regulation. This means using a Category II stablecoin to settle payment for imported goods does not exempt the transaction from foreign exchange documentation. The rules also prohibit routing Category II transactions through alternative channels to evade documentation requirements and other controls. Cross-border virtual asset transactions are treated as foreign exchange transactions in the corresponding category and are subject to the same eligibility, documentation, reporting and settlement conditions as foreign currency transactions.
The regulation requires exporters receiving proceeds in a Category II stablecoin to reference a “Form NXP.” Proceeds are not considered repatriated to Nigeria merely upon receipt in digital token form; they are repatriated after redemption or conversion and deposit of the amount into the exporter’s local account with an authorized dealer. Reporting requirements also extend to licensed service providers, which must submit details of each cross-border transaction within one business day. They must also provide monthly data aggregated by corridor, purpose, token and flow direction to monitor foreign exchange transactions and the balance of payments. The regulation authorizes the central bank to impose transaction or trading limits and customer eligibility requirements for Category II coins if monetary policy, financial stability or foreign exchange management considerations warrant it.
The rules divide stablecoins into two categories: Category I is linked to the naira, while Category II is linked to a foreign currency, and the use of each is subject to permitted purposes and foreign exchange controls. A Category II coin may be issued only through an entity established in Nigeria that holds the central bank’s foreign currency license, and each token launch requires the bank’s prior approval. The regulation also bans algorithmic stablecoins that rely primarily on adjusting supply or demand rather than being fully backed by eligible reserves, as well as fiat-linked tokens backed primarily by other virtual assets. Securities and virtual assets deemed to be securities remain subject to the Nigerian Securities and Exchange Commission’s framework. In customer disclosures, licensed entities must clarify that a stablecoin is not a bank deposit, is not covered by the Nigeria Deposit Insurance Corporation, and does not entitle its holder to interest or returns.
The regulation sets operational liquidity requirements for issuers of foreign currency-linked coins, with a minimum of $10,000,000 or 15% of outstanding liabilities linked to Nigeria, and coverage for redemption requests and payments under stress conditions for 30 days. Liquidity must be distributed across at least two independent approved institutions, and no single bank or counterparty may account for more than 50%. If liquidity falls below the required threshold, the issuer must remedy the shortfall within 3 business days. The bank may restrict issuance, distribution, customer acquisition or transaction volumes until compliance is restored. The rules also set minimum paid-up capital for issuers of Category I naira-linked coins at 10,000,000,000 naira, while reserving the bank’s authority to raise the threshold.
These requirements come as stablecoins are increasingly used for international payments. The International Monetary Fund said in a report on Nigeria published in May 2026 that the country accounted for about 60% of stablecoin flows into sub-Saharan Africa between late 2019 and early 2025. Stablecoins also made up more than 65% of Nigeria’s cross-border cryptocurrency flows in 2024. The fund noted that small and medium-sized importers increasingly rely on them to pay overseas suppliers, and that some larger companies have begun testing their use in trade settlement. Against this backdrop, the regulation links the use of these trade instruments to the licensing, documentation and reporting framework the central bank applies to foreign exchange transactions.
The Block reported on November 6 that the rules took effect on November 5 and that existing operators have 180 days to apply for the appropriate license or authorization, under the transitional requirements. This gives existing operators a transition period to complete their regulatory status under the new regulation. New issuers of Category II coins must be companies established in Nigeria and obtain a license and token approval before making them available locally. The regulation thus combines restrictions on returns from holding coins, documentation requirements for trade payments, and licensing, liquidity and disclosure standards. It also allows the central bank to tighten trading or transaction limits when needed as part of foreign exchange management and financial stability efforts.