…Says Nigeria received $59bn in crypto inflows, ranks 2nd globally
By Emma Ujah, Abuja Bureau Chief
The International Monetary Fund (IMF) has warned that the rising use of dollar-backed stablecoins in Nigeria could undermine monetary policy effectiveness, financial stability and monetary sovereignty, even though they offer benefits in cross-border payments.
In its Country and Regional Focus report released in Washington, D.C., the Fund noted that sharp depreciation of the naira, high inflation and limited access to foreign exchange in 2023 and 2024 significantly increased demand for dollar-linked digital assets.
Citing Chainalysis’ 2024 Global Crypto Adoption Index, the IMF said Nigeria ranked second globally in crypto-asset inflows between July 2023 and June 2024, with inflows estimated at $59 billion. It also noted that the country ranked sixth in 2025.
The report said stablecoins have become a hedge against currency volatility and a tool for facilitating payments to overseas suppliers, especially amid foreign exchange constraints.
It added that following the Central Bank of Nigeria’s restriction on banks servicing cryptocurrency exchanges, crypto-related activities increasingly shifted to peer-to-peer and other less regulated platforms.
While acknowledging benefits such as faster and cheaper cross-border transactions that can enhance trade, remittances and financial inclusion, the IMF warned of broader risks.
The Fund stated that widespread adoption of dollar-denominated stablecoins could function as a form of “digital dollarisation,” weakening demand for the naira and reducing the effectiveness of domestic monetary policy.
It also raised concerns about financial integrity risks, noting that digital transactions routed through wallets and crypto exchanges are harder to monitor using traditional banking oversight systems.
According to the report, the speed and relative anonymity of some platforms may increase exposure to money laundering and other illicit financial flows.
On policy direction, the IMF advised against banning stablecoins outright, warning that such measures would likely be ineffective. Instead, it recommended a balanced regulatory approach that supports innovation while managing risks.
The Fund outlined four key policy priorities.
First, it urged Nigeria to strengthen monetary stability, stressing that a stable and credible domestic currency remains the strongest defence against digital dollarisation. It noted that recent macroeconomic reforms and tighter monetary policy have helped improve confidence in the naira and should be sustained.
Second, it called for stronger regulatory oversight by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC), including clearer rules on stablecoin issuers and alignment with emerging global standards in jurisdictions such as the European Union, Singapore, Hong Kong, Japan and the United States.
Third, the IMF recommended improved data collection and monitoring systems, including the use of blockchain analytics and reporting requirements for naira-to-stablecoin conversions to help regulators detect risks early.
Fourth, it urged upgrades to Nigeria’s payment infrastructure, noting that growing stablecoin adoption reflects gaps in existing systems. Strengthening domestic payment channels, it said, would reduce reliance on alternative digital currencies.
The IMF concluded that addressing structural weaknesses in the financial system remains key to reducing risks while preserving the potential benefits of digital innovation.
