Nigeria Needs Tighter Oversight of Stablecoins, Crypto Assets – IMF

The International Monetary Fund (IMF) has urged Nigeria to strengthen oversight of stablecoins and other crypto-asset activities, warning that the rapid growth of digital assets could pose risks to the country’s financial system if left outside regulatory supervision.

The recommendation formed part of the IMF’s latest assessment of Nigeria’s economy, where the Fund’s Executive Directors stressed the need for authorities to deepen supervision of emerging digital financial products and ensure that stablecoin-related activities fall within the country’s regulatory framework.

According to the report, IMF Directors emphasised that regulators must pay closer attention to the growing influence of stablecoins and other crypto assets on the financial sector.

The report stated, “Directors stressed the importance of further strengthening supervision and bringing stablecoin and other crypto-asset activities into the regulatory perimeter.”

The IMF’s position reflects increasing global concern over the rapid expansion of stablecoins digital assets typically pegged to fiat currencies such as the United States dollar which are gaining traction for payments, remittances and cross-border transactions.

While acknowledging the innovation and efficiency associated with digital assets, the Fund warned that inadequate oversight could expose economies to risks including illicit financial flows, money laundering, terrorism financing, consumer fraud and regulatory arbitrage.

The IMF noted that Nigeria’s crypto market has expanded significantly in recent years, prompting authorities to strengthen regulatory and supervisory frameworks governing digital assets.

In an earlier IMF paper on Nigeria’s crypto ecosystem, the Fund observed that the rapid rise in crypto trading created concerns around “undetected capital outflows and currency speculation, money laundering, terrorism financing and consumer fraud.” It urged authorities to identify unlicensed crypto operators, prevent illegal activities and enhance market surveillance capabilities.

The latest recommendation comes as Nigeria continues to rank among Africa’s largest cryptocurrency markets, driven by demand for alternative payment channels, remittances and access to dollar-linked digital assets.

The Fund also called for stronger supervisory tools and closer collaboration with international regulators to effectively monitor digital asset transactions that increasingly cut across jurisdictions.

According to the IMF, regulatory frameworks must evolve alongside technological innovation to safeguard financial stability while supporting responsible growth in the digital economy.

However, financial experts say the IMF’s latest warning underscores the growing importance of stablecoins within the global financial ecosystem and highlights the need for clear rules that protect investors without stifling innovation.

The recommendation is expected to further shape ongoing efforts by Nigerian regulators, including the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), to establish a comprehensive framework for virtual assets and digital finance.