The International Monetary Fund (IMF) has revealed that in Nigeria, U.S. dollar–linked digital tokens, known as stablecoin, are now used more than ever to move money across borders.
This resulted from households and small firms looking for faster and cheaper ways to pay and receive funds.
The IMF says this transition has moved beyond early crypto users. It is now a payment channel in Nigeria’s financial system, even if it’s still outside traditional banking rails.
Between July 2023 and June 2024, Nigeria recorded about $59 billion in crypto inflows. That placed the country among the most active crypto markets globally.
The IMF also notes that Nigeria accounts for roughly 60% of stablecoin inflows in sub-Saharan Africa since 2019.
A smartphone and internet connection are usually enough to receive remittances or send payments abroad within minutes. Costs are also lower in many cases when compared with bank-led transfers.
The World Bank estimates that sending $200 to sub-Saharan Africa costs about 9% of the transaction value on average. That compares with a global average of around 6%. Stablecoins have become a cheaper alternative in some of these flows.
On the domestic side, the naira weakened through 2023 and 2024, while inflation stayed high. At the same time, access to foreign exchange was tight. Many users turned to dollar-pegged assets as a way to protect value or pay overseas suppliers.
When the Central Bank of Nigeria restricted banks from servicing crypto exchanges in 2021, activity moved further into peer-to-peer platforms and informal digital channels.
What started as small-scale crypto trading now overlaps with everyday financial needs, especially payments and savings in foreign currency terms.
Looking at the benefits, transfers move faster, costs can fall, and access improves for people outside formal banking systems. Small businesses also use stablecoins to settle cross-border trade more quickly.
However, the IMF warns that broad use of dollar-pegged tokens can weaken the role of the naira. When more value moves into dollar-based digital assets, domestic monetary policy becomes less effective in influencing real economic activity.
There are also issues around oversight. Transactions pass through digital wallets and crypto platforms that do not always fall under traditional banking supervision. That makes it harder for regulators to track flows in real time.
Financial integrity risks cannot be overlooked. Faster and less transparent channels can create space for illicit transactions, even if most users are acting within the law.
These challenges are not unique to Nigeria, but the scale of adoption here makes them more visible.
Policy responses are already taking shape. The Securities and Exchange Commission in Nigeria has introduced policies for virtual asset service providers, while the Central Bank of Nigeria has issued guidance on how banks should interact with crypto-related firms.
The IMF suggests that regulation alone will not be enough. It recommends a stronger approach that keeps innovation open but reduces risk.
One priority is macroeconomic stability. A stronger and more predictable naira would reduce the need for dollar-linked alternatives in the first place.
Another is better supervision. Transparent regulations for stablecoin issuers, aligned with frameworks emerging in places such as the European Union, Singapore, Hong Kong, Japan and the United States, could help close regulatory gaps while still allowing innovation.
Data collection is also a gap. Regulators need better insight into how stablecoins move through the system, especially where they convert into naira or interact with local banks.
Finally, on payment infrastructure, Nigeria has made progress with instant payment systems and regional efforts like the Pan-African Payment and Settlement System. Still, gaps in cross-border transfers still push users toward alternative digital routes.
Stablecoins are unlikely to replace traditional finance. They are instead filling gaps that already exist in cross-border payments.
