Nigeria embraces stablecoins; HK caps stablecoin licenses
A year after issuing its first batch of digital asset exchange licenses, Nigeria says it's ready to embrace stablecoins, but they must be regulated and comply with its financial laws.
Meanwhile, Hong Kong authorities are urging caution in stablecoin adoption as its landmark Stablecoins Ordinance takes effect. The city-state says it will only issue a handful of licenses, and that most applicants 'will be disappointed.'
Nigeria's stablecoin embrace
Speaking at the Nigeria Stablecoin Summit in Lagos, the Director-General of the Securities and Exchange Commission (SEC), Emomotimi Agama, backed stablecoins as disruptive financial tools.
'I stand before you as both a regulator and an advocate for responsible innovation. My message today is clear: Nigeria is open for stablecoin business, but on terms that protect our markets and empower Nigerians,' he said, as reported by local outlets.
Nigerians have been the most avid stablecoin users in Africa. A June report by Yellow Card exchange revealed that nearly 26 million Nigerians have been using stablecoins, equating to 12% of the population, which ranks the country first globally for adoption. The report described Nigeria's stablecoin adoption as 'a signal of how financial innovation can thrive in response to local needs.'
The DG joined several other African leaders who have acknowledged that stablecoins have become a vital cog in the continent's financial rails. In Kenya, the central bank revealed that one in three banks has expressed strong interest in stablecoins, while in South Africa, the financial regulators have pointed out that they expect stablecoins to become the primary form of digital asset adoption over the next five years.
Agama says that Nigerians have been using stablecoins in cross-border funds transfers and, with the naira losing over 70% of its value against the U.S. dollar in the past three years, they have become a hedge against the local currency's depreciation.
'Across the continent, freelancers, traders, and businesses are increasingly opting for stablecoin payments to hedge against volatility, a trend significantly amplified by the naira's fluctuations, which have driven exponential growth in demand for dollar-backed digital assets,' he stated.
Market giants USDT and USDC are the most dominant in the Nigerian market. However, Agama said, 'Africa needs African solutions that reflect our market conditions, demographic realities, and development priorities.' One of these African solutions is cNGN, Nigeria's first homegrown regulated stablecoin. Launched by the African Stablecoin Consortium, cNGN has hit $2.5 million in transaction volume across dApps, on-chain swaps, GameFi ecosystems, and merchant payments.
cNGN recently told CoinGeek it's eyeing expansion beyond Nigeria, deepening its liquidity, and broadening its use cases.
'Five years from today, I want to see a Nigerian stablecoin powering cross-border trade from Dakar to Dar es Salaam. I want to see global capital flowing into Lagos as the stablecoin hub of the global south. This is not just finance. This is nation-building,' Agama told the attendees.
HKMA: We'll only hand out a handful of licenses
In Hong Kong, the city's de facto central bank has called for caution amidst rising public interest in stablecoins.
Hong Kong's Stablecoin Ordinance took effect on August 1, and some of Asia's largest companies competed to be among the first to issue stablecoins under the new regime. However, the chief executive of the Hong Kong Monetary Authority (HKMA), Eddie Yue, now says that only a select few will receive the green light.
In his statement, Yue warned against the 'growing frothiness' and 'excessive exuberance' as the new regime takes effect. He says that some public companies have been putting out statements mentioning stablecoin integration to excite investors and spark a stock price rally.
'…in the initial stage, we will at most grant a handful of stablecoin issuer licences. In other words, a large number of applicants will be disappointed,' Yue warned.
While HKMA hasn't revealed any details about the licensing process, experts opine that the big companies with extensive experience in tech and finance are most likely to beat the smaller startups to the punch. Those who have participated in the HKMA's Stablecoin Sandbox stand an even bigger chance. They include JD.com's (NASDAQ: JD) stablecoin subsidiary, Animoca Brands, and Standard Chartered Bank (NASDAQ: SCBFF).
While the new framework makes Hong Kong one of the world's most attractive stablecoin hubs, it comes with risks to investors. The city has seen its fair share of fraudulent digital asset projects, the most prominent being JPEX, which sank with over $200 million in user funds.
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