Stablecoins are supposed to make cross-border payments easier. But for the companies issuing them, operating across those borders is becoming more complicated and expensive.
What’s happening? Nigeria’s Central Bank (CBN) has introduced new rules requiring issuers of foreign-currency stablecoins, including those behind dollar-pegged tokens such as USDT and USDC, to maintain at least ₦15 billion ($11.16 million) in paid-up capital. They must also establish locally incorporated, licenced businesses to serve the Nigerian market. Issuers of naira-backed stablecoins face a ₦10 billion ($7.44 million) requirement.
And that’s not all. Foreign-currency stablecoin issuers must maintain a separate operational liquidity buffer of at least $10 million, potentially more depending on their Nigerian obligations. That’s in addition to the capital and reserves required to back their tokens.
Nigeria isn’t alone. In July, Kenya introduced regulations requiring stablecoin issuers to maintain KES 300 million ($2.3 million) in paid-up capital and register locally. The rules also require companies to hold at least 30% of funds received for stablecoin issuance in Kenyan bank trust accounts, with the remainder invested locally.
Explain like I’m new here. International companies typically issue stablecoins such as USDT and USDC, but Nigerians and Kenyans use them to access dollars, pay overseas suppliers, and move money across borders. Regulators want those companies to meet domestic financial requirements rather than relying solely on approvals obtained abroad.
State of play: Here’s where things get interesting. If more African countries introduce separate capital, reserve, and licencing requirements, stablecoin issuers could face the cost of establishing regulated operations in every market they want to serve.
Large companies like Tether and Circle may be better placed to absorb those costs. Smaller issuers could struggle to justify entering certain markets, potentially leaving users and payment companies with fewer regulated stablecoin options.
Between the lines: Thereis a reasonable case for these rules. Local supervision and accessible reserves can protect customers when an issuer fails or cannot honour withdrawals. But there’s a trade-off: Africa could end up with a patchwork of national stablecoin markets, each with different requirements, even though the tokens themselves can move across borders.
Zoom out: Stablecoins have made transferring digital dollars relatively simple. Making those transfers work legally across multiple African markets may prove considerably harder.