Nigeria has taken a significant step forward in its digital economy with the launch of cNGN, the country's first private consortium-backed stablecoin, on the Busha cryptocurrency exchange. The stablecoin, pegged 1:1 to the Naira, is designed to increase the demand for the local currency and help it gain value in the forex market.

The cNGN stablecoin is the result of a joint venture between several banks, fintechs, and blockchain advocacy and tech consulting firms, including Convexity, Alpha Geek Technologies, Digital Currency Coalition, and Interstellar, all coming together under the African Stablecoin Consortium (ASC). The ASC secured approval in principle from the Securities and Exchange Commission (SEC) in August 2024 as part of its sandbox Regulatory Incubatory (RI) programme.

Although the cNGN is not a government-led project, like the eNaira launched by the Central Bank of Nigeria (CBN) in 2021, it still owes its existence to the SEC's regulatory framework. The SEC's approval has paved the way for the private sector to develop and launch its own stablecoin, marking a significant milestone in Nigeria's digital economy.

The cNGN stablecoin is built on the Bantu blockchain, a layer-1 network, and is designed to operate across multiple protocols, including Binance Smart Chain, Base, Ethereum, Polygon, and Assetchain. Currently, it is only fully integrated on Binance Smart Chain (BEP-20) and Base, a builder-friendly layer-2 blockchain, allowing users to transfer cNGN between wallets on the Base network.

However, the stablecoin's widespread adoption is hindered by its limited accessibility. Users can only buy and sell cNGN on the Busha exchange, and it is not yet trading on-chain. This limitation is expected to be addressed once the stablecoin begins trading on-chain, which could pave the way for major foreign crypto exchanges, including Binance, to list the stablecoin.

The cNGN has many potential use cases, including remittance, where its integration with multiple blockchain networks offers low-cost options that are cheaper than USDC or Tether. For example, sending $100 USDT from one wallet to another on a congested Ethereum (ERC-20) blockchain network costs at least $1. With cNGN, the fee is significantly lower, making it an attractive option.

Despite the launch of cNGN, its adoption is expected to face challenges, including the weak fiat Naira reserves and the need for awareness and education around the stablecoin. According to a Web3 policy consultant, the stablecoin's prospects could improve significantly once it begins trading on-chain, but its success will depend on the awareness and education created around it.

Busha, which secured a provisional licence from the SEC in August 2024, claims that it listed the cNGN on its trading platform due to the compliant nature of the stablecoin. The exchange follows an asset listing protocol that requires projects to have enough liquidity, comply with juridical regulations, and show proper documentation of their project.

Quidax, another crypto startup that secured a provisional licence in August 2024, has yet to list the stablecoin on its platform. The ASC did not immediately respond to a request for comment, and several Convexity staff members with direct involvement in the cNGN project declined to comment.

The launch of cNGN marks a significant milestone in Nigeria's digital economy, and its success could pave the way for further innovation and adoption of digital currencies in the country. As the stablecoin continues to evolve and expand its reach, it will be interesting to see how it impacts the Nigerian economy and the broader digital landscape.