cNGN is a new stablecoin promoted by a consortium of Nigerian Banks and financial institutions. The new stablecoin is not a replacement for the Central Bank backed eNaira digital currency, but a new stablecoin that will operate alongside it.
While the eNaira is promoted by the Central Bank of Nigeria and is more versatile, the cNGN project will be overseen by top Nigerian Banks and will be more targeted at facilitating payment and international transfers.
Like the eNaira, the cNGN is pegged to the Nigerian Naira and will exchange 1:1 to the physical Naira. This means that each cNGN token in circulation will be backed by 1 Naira in the reserve account.
Unlike the eNaira that is built on a private Blockchain Distributed Ledger Technology powered by enterprise grade Hyperledger Fabric, the cNGN stablecoin is built on public blockchains such as Bantu, Polygon, Ethereum, BNB Smart Chain and Tron.
The stablecoin, expected to launch in 2024, is promoted by leading Nigerian Banks and payment services providers like Access Bank, Sterling Bank, Providus, Korapay, First Bank, Interstellar, Interswitch, Budpay and Convexity.
cNGN is not a CBDC, but a stablecoin
cNGN is not a CBDC like eNaira, but is a stablecoin similar to USDT. When fully launched it will be the first real stablecoin to be pegged to the Naira.
Support from leading banks and Fintech companies in Nigeria will also give it some credibility in the marketplace which will be important for widespread adoption.
Its compatibility with multiple public blockchains will facilitate international transfers and will lead to seamless cross-border transactions between Nigerians and the rest of the world.
The cNGN project became possible after the Central Bank of Nigeria relaxed its earlier restriction on cryptocurrencies in the Nigerian banking system with the release of a new guideline for virtual assets and virtual assets service providers (VASPs).
The CBN emphasizes that while the new guidelines allows VASPs to open accounts in Nigerian banks, banks and other financial institutions in Nigeria are still banned from holding, trading, and/or transacting in virtual assets in their accounts.
For now it is not clear how cNGN will work and how holders can acquire it. Will it be available in cryptocurrency marketplaces like Binance? We hope to get answers in 2024.
