The International Monetary Fund (IMF) has issued a stark warning regarding the structural transformation of West Africa’s financial boundaries, regarding stablecoins.
In a detailed country report titled “Stablecoins in Nigeria: A Growing Cross-Border Channel,” authored by IMF Mission Chief Axel Schimmelpfennig and economist Bo Zhao, the multilateral lender revealed that Nigeria has captured a staggering 60% of all stablecoin inflows into Sub-Saharan Africa (SSA) since 2019.
The report underscores a major paradigm shift: what began as a niche speculative technology has officially transformed into a critical cross-border transactional channel. The IMF disclosed that Nigeria pulled in an estimated $59 billion in gross crypto-asset inflows between July 2023 and June 2024, ranking the nation second globally on Chainalysis’s Global Crypto Adoption Index.
However, the Fund warned that this massive shift into U.S. dollar-pegged digital assets operates as a “digital form of dollarization,” posing immediate threats to the Central Bank of Nigeria’s (CBN) monetary sovereignty and opening deep gaps in anti-money laundering (AML) regulatory perimeters.
Drivers of stablecoin adoption
According to the IMF, “what began as a niche technology has become a meaningful cross-border payments channel,” with Nigerian households and small businesses increasingly using stablecoins for international transactions and payments to overseas suppliers.
The report noted that adoption accelerated during 2023 and 2024 amid macroeconomic pressures. “Stablecoins emerged as a hedge against currency risk and a convenient means of paying overseas suppliers,” the Fund said.
It explained that “the sharp depreciation of the naira, high inflation, and constrained access to foreign exchange” contributed to rising demand for dollar-linked digital assets.
CBN regulatory impact
The IMF also noted that after the Central Bank of Nigeria restricted banks from servicing cryptocurrency exchanges in February 2021, “activity shifted to less regulated channels, notably peer-to-peer platforms.”
As stablecoins are typically denominated in U.S. dollars, widespread use can resemble a digital form of dollarization. “By reducing demand for the local currency, it could weaken the transmission of domestic monetary policy,” the IMF stated.
The IMF further cautioned that “transactions traditionally routed through banks are increasingly taking place through digital wallets and crypto exchanges,” adding that “existing monitoring systems designed for conventional financial intermediaries may not adequately capture such transactions.”
According to the report, “the speed and relative anonymity of some platforms heighten the risks of money laundering and other illicit financial activities.”
IMF policy recommendations
However, the IMF advised against outright suppression of stablecoins, saying such measures would likely have limited success.
“The most effective defence against digital dollarization is a stable and credible domestic currency,” the Fund stated. “Nigeria’s recent macroeconomic reforms and tighter monetary policy have helped restore confidence in the naira. Sustaining this progress will be critical.”
It also urged stronger oversight, improved monitoring systems and upgraded payment infrastructure, stressing that “these risks are not unique to Nigeria, but the scale of adoption makes them more pronounced.”
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