Nigerians have had ample time to digest the recent events in their crypto space, led by the banking sector. This has raised hopes that the major financial players and the federal government are finally taking a more accommodating approach to the digital asset class. We all have thoughts on this and I want to share mine with you while also hearing from you. We can better educate each other when we talk about these topics.

Disclaimer: This is a personal opinion from a personal perspective. It is solely for educational purposes and to gain more knowledge. This won't be a long article.

I'll come out the gate swinging on this one; stablecoins are a pillar of decentralized finance, created to give users the freedom of transacting with stable assets not tied to central authorities like banks. It's therefore off-putting to me that a stablecoin will be developed by a consortium of banks that promise a remittance revolution and global trade efficiency. I'm not a prophet of doom and I will always welcome innovations in the African crypto space but I do feel it necessary to look at this with concern. Is this consortium trying to consolidate greater financial power? Remember, Nigeria is Africa's largest crypto hub and the second-largest crypto adopter in 2023, as reported by Chainalysis.

Could the increase in adoption be the reason for the quick and sudden turnaround in policy by the Central Bank of Nigeria? Talking about the apex bank, let's move onto another pain point of mine - What happened to the eNaira? Was it not supposed to be a giant technological stride by an African country, the first of its kind? CBDCs have been the topic of discussion by financial players across the board, with many drawing up frameworks for a possible pilot run in the future. However, the CBN rolled out the eNaira, to the surprise of everyone in the country.

Parallels can be drawn from the eNaira and the cNGN. The editor-in-chief of CBNUPDATE, Mr. Osita Nawnisobi stated in his note in Vol 3, No. 10. of the October 2021 issue of the circular:

"The eNaira project is envisaged to improve financial inclusion, increase remittance and ensure a more effective monetary policy. The eNaira also has the potential to grow the country's Gross Domestic Product (GDP) by $29 billion over the next 10 years."

Does his statement ring any bells? Well, it should because it's similar to what the ASC has said about the cNGN. They want to revolutionize remittances and improve financial inclusion, how did that work out? I'll tell you how, more than a year since its launch, the eNaira has seen very low adoption, as NODO reporter Caleb Nnamani wrote:

"To date, about 98.5% of eNaira wallets, for any given week, have not been used even once—a “disappointingly low adoption rate”, says the IMF." Read Caleb's full article here.

The eNaira is a forgotten project, no average Nigerian uses it. Business merchants don't use it as a form of payment settlement and how many Nigerians are using it for cross-border remittances? The CBN has already set precedence for what to expect from the cNGN, especially since its aim is the exact one given to its predecessor, bar the expected GDP growth of $29bn, a figure the CBN did not explain in the earlier cited circular. it has been stated that, unlike the eNaira, Nigeria's CBDC with broader functionalities, the ASC will oversee the cNGN stablecoin. This strategic positioning allows the stablecoin to complement the eNaira rather than replace it, offering a nuanced approach to the digital currency landscape. It appears that they will work side by side, instead of one replacing the other, but we know that the eNaira has not been as influential as it was to be so when the cNGN is released, it will replace the eNaira. Finna protocol — a Nigerian multi-utility stablecoin ecosystem — also believes this view and commented in a post on X.

The CBN created something that is no longer viable and wants to use the cNGN as a way to get the stablecoin control they've been after. Just as Finna Protocol, I will keep an open mind.

Excessive government oversight is another qualm I have with all of this. Given its approval by the CBN and the ASC assuring "compliance", I'm tempted to bet that the government will be able to monitor every single transaction with their real data i.e. names of senders and recipients, something that doesn't happen with normal blockchains. Hear me out, I'm not criminally fraudulent and I do believe the government should monitor financial transactions, but the CBN has a track record of abusing its power of financial oversight. Recall the EndSARS protests of 2020, the CBN swiftly moved to ILLEGALLY block the accounts of the "protest leaders". No matter your thoughts on EndSARS, it was an illegal abuse of power by the CBN and the judiciary agreed, leading to the unblocking of said accounts. What will the ASC give up to the CBN for their stablecoin to move forward and what will the CBN give in return? Excessive financial control led to what Canada did during the Trucker protests in 2022. Come February 27, these fears will be put to rest or sent to the moon.

Now, some of you may think I'm a bitter person, but that is far from true. Cautious is what I'd use, especially given the track record set by banks in Nigeria. I'm not the only person who shares these worries, other Nigerians also commented their thoughts on the issue under a post on CoinMarketCap, you can read them below.

From the comments, you can see that there is a mixed bag of opinions, but more people are sceptical of this development. My favourite comment has to be the one about money being swallowed by godzilla, given the propensity for animals to steal money in Nigeria in years gone by.

My last concern is the instability of the Naira. A stablecoin protects investors from the volatility that affects non-stable cryptocurrencies, but what will happen when a stablecoin is pegged to a volatile currency that has no assurance of future stability? Business Insider looked into this very pain point and they did not pull their punches during their analysis, stating that "The naira is currently the worst-performing currency on the African continent, and the third worst-performing currency in the world." They went on to further discuss the problem of pegging a stablecoin to an unstable currency, a discussion you can continue here.

I'll end here and on a hopeful note. I know I've given you reasons to be scared but this is not to instil fear, rather, it's for us to become more cautious of what is going on. We all know Nigeria and we know what the CBN is capable of, so caution is safe and important when dealing with them.

I hope it works out well and lives up to expectations because we cannot have another stablecoin failure in Nigeria, it will set a bad precedent for future adoption and innovation.

As I stated, I would like to hear your thoughts on this matter. what are you thinking about, is there something I don't know? Please share it here let's all learn. Cooperation is better than competition. Share this with people who have their opinions as well, I want to hear from them and I know you do too.

Till next time.