Nigerians are increasingly turning to dollar-pegged digital currencies known as stablecoins to transfer money across borders, as households and small businesses look for faster and cheaper alternatives to traditional payment channels, the International Monetary Fund (IMF) said on Tuesday.
The IMF said stablecoins, which are cryptocurrencies designed to maintain a stable value by being linked to assets such as the US dollar, have moved beyond a niche digital finance product to become an important payments channel in Nigeria.
According to the Fund, Nigeria received about US$59 billion in cryptocurrency inflows between July 2023 and June 2024, accounting for roughly 60 percent of stablecoin inflows in sub-Saharan Africa.
The rapid adoption of stablecoins in Nigeria has been driven by their ability to facilitate near-instant transfers through smartphones and digital wallets, while providing users with an alternative way to hold value outside the local currency.
For many Nigerians, particularly small businesses engaged in international trade and individuals receiving funds from abroad, stablecoins provide a faster route for cross-border transactions compared with conventional banking systems.
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The IMF said stablecoins can also reduce the cost of remittances, which remain expensive in many African countries. Citing World Bank data, the Fund noted that sending $200 to sub-Saharan Africa costs an average of about 9 percent of the transaction value, compared with a global average of around 6 percent.
The growing popularity of dollar-linked digital tokens has also been linked to demand for protection against fluctuations in the naira, Nigeria’s local currency, which has experienced significant volatility in recent years.
By offering a digital asset tied to the US dollar, stablecoins allow users to preserve purchasing power while accessing global financial networks.
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However, the IMF warned that the growing use of stablecoins presents policy challenges for authorities.
The Fund said widespread adoption of dollar-backed digital assets could weaken monetary policy by reducing demand for the naira and limiting the effectiveness of traditional economic tools.
It also raised concerns over regulation, noting that increased reliance on digital wallets could make financial oversight more difficult and create risks linked to illicit financial flows.
Nigeria has one of Africa’s largest cryptocurrency markets, driven by a young, digitally connected population and strong demand for alternative financial services.
The country’s financial authorities have previously expressed concerns about cryptocurrency activity, particularly regarding foreign exchange pressures, consumer protection and regulatory supervision.
However, global interest in stablecoins has grown significantly as businesses and individuals seek faster digital payment solutions. The sector has received increased attention internationally, including support from some policymakers in the United States.
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The IMF said the challenge for regulators will be finding a balance between encouraging financial innovation and ensuring that digital currencies do not undermine financial stability.
For Nigeria, where millions of people rely on digital platforms for commerce and payments, stablecoins are becoming an increasingly important part of the evolving financial landscape.
The Fund said effective regulation, improved transparency and stronger monitoring systems will be essential as digital assets continue to expand across the country and the wider African market.
