A newly released report by the International Monetary Fund (IMF) has said that stablecoins now form a key bridge between crypto markets and the traditional financial system in Nigeria, ranking the country top in inflows in Sub-Saharan Africa.
Nigeria received about $59 billion in crypto-asset inflows between July 2023 and June 2024. It ranked second globally on Chainalysis’s 2024 Global Crypto Adoption Index, and sixth in 2025.
Within sub-Saharan Africa, Nigeria accounts for roughly 60 per cent of stablecoin inflows since 2019, the report titled ‘Stablecoins in Nigeria: A Growing Cross-Border Channel’, released on Tuesday, noted.
Nigerian households and small firms are moving money across borders in a new way: via smartphones, digital wallets, and U.S. dollar–pegged crypto assets known as stablecoins.
What began as a niche technology has become a meaningful cross-border payments channel. Its rapid growth is easing long-standing frictions in cross-border transactions.
It is also testing the limits of existing monetary and regulatory frameworks.
Why Stablecoins Have Taken Hold
IMF noted that the appeal is straightforward, adding that stablecoins allow users with a smartphone and internet access to receive remittances or make cross-border payments in minutes, often at a lower cost than traditional channels.
“For households and small firms with limited access to formal banking services, this is a practical alternative.”
According to the report, global drivers help explain the broader uptake in Nigeria.
“Stablecoins are relatively stable in value, easy to transfer, and widely used as settlement assets within crypto markets.
“They facilitate trading between exchanges and provide a convenient store of liquidity. For remittances, they can undercut conventional channels, where the average cost of sending US$200 to sub-Saharan Africa remains around 9 per cent of transaction value, well above the global average of 6 percent, according to the World Bank.
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Flows Track Major Policy, Market Events
Domestic conditions have amplified these effects. In 2023 and 2024, the sharp depreciation of the naira, high inflation, and constrained access to foreign exchange increased demand for dollar-linked assets.
Stablecoins offered both a hedge against currency risk and a tool for paying overseas suppliers.
After the Central Bank of Nigeria (CBN) restricted banks from servicing crypto exchanges in February 2021, IMF said activity shifted to less regulated channels, notably peer-to-peer platforms.
Policy Trade-Offs
The rise of stablecoins in Nigeria brings clear benefits – faster, cheaper cross-border payments can support trade, remittances, and financial inclusion. Yet the same features raise policy concerns.
One is monetary sovereignty. As stablecoins are typically denominated in U.S. dollars, widespread use can resemble a digital form of dollarisation. By reducing demand for the local currency, IMF said it could weaken the transmission of domestic monetary policy.
“Another concern is financial integrity. Activity that once flowed through banks is moving increasingly to digital wallets and crypto exchanges.
Monitoring systems designed for traditional intermediaries may not capture these transactions effectively, the report stated, noting that the speed and anonymity of some platforms can also increase risks of illicit finance, including money laundering.
IMF noted that these risks are not unique to Nigeria, but the scale of adoption makes them more pronounced.
A Pragmatic Policy Response
Attempts to suppress stablecoin use are likely to be only partly effective. A more durable approach is to allow innovation while managing risks.
Here, the IMF analysis identified four priorities.
First, safeguard monetary stability. The most effective defense against digital dollarisation is a stable and credible domestic currency.
“Nigeria’s recent macroeconomic reforms and tighter monetary policy have helped restore confidence in the naira. Sustaining this progress will be critical.”
Secondly, strengthen oversight.
“Nigeria has taken steps in this direction, including the Securities and Exchange Commission’s rules for virtual asset service providers and the CBN’s guidance on their interaction with banks.
The next step, IMF noted, is to clarify the treatment of stablecoin issuers and align domestic rules with emerging international frameworks, such as those in the European Union, Singapore, Hong Kong SAR, Japan, and the United States, while adapting them to local conditions.
Thirdly, improve data – Policymakers need better visibility on how stablecoins are used, particularly at the interface with the domestic financial system.
“Combining blockchain analytics with reporting on naira–stablecoin conversions would help regulators identify risks early and respond more effectively.”
Finally, the Fund advised the government to upgrade the payment infrastructure.
“Much of the demand for stablecoins reflects gaps in existing systems. Nigeria has made progress through instant domestic payments and participation in regional initiatives such as the Pan-African Payment and Settlement System.
“Further investment in faster, cheaper, and more interoperable cross-border systems could reduce reliance on unregulated channels.”
An Evolving Landscape
The report noted that stablecoins are neither a passing trend nor a complete substitute for traditional finance, saying they are best seen as a response to persistent frictions in cross-border payments. In Nigeria, those frictions are real, and users have found a workaround.
“The policy challenge is to narrow the gap that made the workaround attractive, while ensuring that new risks remain contained. That requires a clear strategy: open to innovation but anchored in sound macroeconomic policy and effective regulation”, the report concluded
