The International Monetary Fund (IMF) has warned that the increasing adoption of US dollar-denominated stablecoins in Nigeria could reduce demand for the naira and weaken the effectiveness of the country's monetary policy framework.
IMF Report on Stablecoins
In a report titled "Stablecoins in Nigeria: A Growing Cross-Border Channel" released on Tuesday, the IMF observed that widespread use of stablecoins poses risks to monetary sovereignty, especially as more individuals and businesses turn to digital dollar-linked assets for savings and transactions.
Nigeria remains one of the world's largest crypto markets, receiving approximately $59 billion in crypto-asset inflows between July 2023 and June 2024. The country ranked second globally on Chainalysis's 2024 Global Crypto Adoption Index and sixth in 2025. Additionally, Nigeria accounts for about 60% of stablecoin inflows into sub-Saharan Africa since 2019.
Benefits and Risks
The IMF acknowledged that stablecoins facilitate cheaper and faster cross-border payments. However, it cautioned that their growing popularity could have broader macroeconomic implications for Nigeria's monetary policy. The IMF also flagged risks to financial integrity, citing the speed and anonymity of some platforms as potential enablers of illicit finance, including money laundering.
"One is monetary sovereignty. As stablecoins are typically denominated in US dollars, widespread use can resemble a digital form of dollarization. By reducing demand for the local currency, it could weaken the transmission of domestic monetary policy," the IMF stated.
"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 speed and anonymity of some platforms can also increase risks of illicit finance, including money laundering," the report added.
Policy Recommendations
To address the risks of digital dollarization, the IMF urged policymakers to maintain macroeconomic stability and strengthen confidence in the domestic currency. It highlighted Nigeria's recent macroeconomic reforms and tighter monetary policy as steps that have helped restore confidence in the naira.
The IMF also called for stronger regulation of the digital asset ecosystem, urging Nigeria to adapt regulatory frameworks from the European Union, Singapore, Hong Kong SAR, Japan, and the United States to local conditions. It stressed the need for better data on stablecoin activity and improvements in payment infrastructure to reduce reliance on unregulated channels.
Context of Stablecoin Adoption
Stablecoins are digital currencies pegged to the US dollar or other fiat currencies, serving as a critical financial bridge in Nigeria. The sharp depreciation of the naira in 2023 and 2024, elevated inflation, and constrained access to foreign exchange increased demand for dollar-linked assets. The IMF noted that after the Central Bank of Nigeria restricted banks from servicing crypto exchanges in February 2021, a substantial portion of crypto activity shifted to less regulated channels, particularly peer-to-peer platforms.
The IMF concluded that while the challenges associated with stablecoins are global, Nigeria's scale of adoption makes the risks more pronounced and warrants close policy attention.
