LAGOS / WASHINGTON – The International Monetary Fund (IMF) has raised concerns that the rapid rise of dollar-linked digital currencies in Nigeria could gradually weaken demand for the naira and complicate the country’s monetary policy framework, even as digital assets reshape how money moves across Africa’s largest economy.
The warning comes amid a surge in the use of stablecoins—digital tokens pegged to the U.S. dollar—for payments, remittances, and cross-border trade, with Nigeria emerging as one of the world’s most active cryptocurrency markets.
According to IMF-cited data, Nigeria recorded an estimated US$59 billion in crypto-asset inflows between July 2023 and June 2024, reflecting the scale of digital finance activity flowing through smartphones, crypto wallets and decentralised platforms.
The Fund notes that Nigeria accounts for roughly 60% of stablecoin inflows into sub-Saharan Africa, underscoring its dominant position in the region’s fast-growing digital payments ecosystem alongside markets such as South Africa.
Stablecoins—digital currencies designed to maintain a fixed value, typically pegged to the U.S. dollar—have become increasingly popular in Nigeria due to persistent inflation, foreign exchange shortages and volatility in the naira.
Unlike highly volatile cryptocurrencies such as Bitcoin, stablecoins offer users price stability, making them attractive for everyday transactions, savings, and cross-border payments.
For millions of users, they are now functioning as a parallel payment system. Freelancers receiving international payments, importers sourcing goods, students paying foreign tuition fees and small businesses managing supply chains are increasingly bypassing traditional banking rails in favour of faster, cheaper digital dollar transfers.
A growing number of transactions are now executed within minutes via mobile devices, significantly reducing reliance on formal foreign exchange channels and conventional remittance networks.
The IMF, however, warns that this shift could have unintended macroeconomic consequences if left unchecked.
“While stablecoins can improve payment efficiency, lower transaction costs and improve financial inclusion, the increasing use of U.S. dollar-denominated stablecoins raises risks to monetary sovereignty, capital flow management and financial stability,” the IMF said in its latest assessment of Nigeria’s economy.
The concern centres on what economists describe as “digital dollarisation”—a process in which households and firms increasingly hold and transact in dollar-denominated digital assets rather than the local currency.
In such a scenario, demand for the naira could weaken over time, potentially reducing the Central Bank of Nigeria’s ability to influence liquidity conditions and steer the economy through interest rate policy.
Nigeria’s adoption curve reflects broader global trends. A February 2026 survey by YouGov, BVNK, Coinbase and Artemis found that Nigeria and South Africa are among the fastest-growing markets for stablecoin usage worldwide, driven largely by demand for cheaper cross-border payments and protection against currency depreciation.
The survey also revealed that 95% of Nigerian respondents would prefer to receive payments in stablecoins rather than in naira, highlighting the extent of trust erosion in the domestic currency among digital-first users.
Globally, stablecoins have evolved into a market exceeding US$300 billion, dominated by dollar-pegged tokens such as Tether and USD Coin, and increasingly integrated into cross-border payment ecosystems.
The World Bank, cited in IMF analysis, estimates that sending US$200 to sub-Saharan Africa still costs around 9% in transaction fees—well above the global average of 6%—a gap that stablecoins are rapidly filling.
For policymakers, however, the innovation brings a regulatory dilemma: how to support financial technology growth without undermining monetary control and financial oversight.
Nigeria previously adopted a restrictive stance on cryptocurrencies in 2021, pushing much of the sector into peer-to-peer markets after banking restrictions limited formal crypto transactions. Since then, authorities have gradually shifted toward a more structured regulatory approach.
The Securities and Exchange Commission has introduced frameworks for digital asset service providers and is exploring oversight mechanisms for stablecoin-related activities, signalling a move toward partial formalisation of the sector.
The IMF is now urging deeper coordination between the Central Bank of Nigeria and capital market regulators to ensure digital assets are brought fully within the country’s regulatory perimeter.
Analysts say Nigeria’s challenge mirrors that of other emerging economies: balancing innovation-driven financial inclusion with the need to preserve currency stability and effective monetary policy transmission in an increasingly digital financial system.
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