The International Monetary Fund (IMF) has warned that the growing use of U.S. dollar-denominated stablecoins in Nigeria could weaken demand for the naira and reduce the effectiveness of the country’s monetary policy framework.

The warning was contained in a report titled “Stablecoins in Nigeria: A Growing Cross-Border Channel,” which examined the rapid adoption of stablecoins for payments, remittances, and savings.

According to the IMF, the migration of cross-border transactions from traditional banking channels to digital wallets and cryptocurrency exchanges is creating a form of digital dollarization, with implications for exchange rate management and monetary policy transmission.

What they are saying

The Fund noted that as more Nigerians hold and transact in dollar-pegged stablecoins, demand for the local currency declines, potentially limiting the Central Bank of Nigeria’s (CBN) ability to influence economic activity through interest rates and foreign exchange policies.

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The report attributed the trend largely to the macroeconomic conditions experienced in 2023 and 2024, including persistent inflation, naira depreciation, and foreign exchange shortages, which increased the appeal of dollar-linked digital assets as both a store of value and a payment mechanism.

  • “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.

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The report highlighted the scale of cryptocurrency and stablecoin adoption in Nigeria, describing the country as one of the world’s largest digital asset markets.

According to the IMF, Nigeria recorded approximately $59 billion in crypto-asset inflows between July 2023 and June 2024. The country ranked second globally on Chainalysis’ 2024 Global Crypto Adoption Index and sixth in the 2025 ranking.

Within sub-Saharan Africa, Nigeria accounts for nearly 60% of all stablecoin inflows recorded since 2019, underscoring the growing importance of digital assets in the country’s financial ecosystem.

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The Fund noted that stablecoins have gained traction partly because they provide faster and cheaper alternatives for cross-border payments and remittances.

  • Sending $200 to sub-Saharan Africa costs an average of about 9% through traditional channels, compared with a global average of 6%, making lower-cost digital alternatives increasingly attractive.
  • The IMF observed that a growing share of payment activity that previously flowed through banks is now taking place via crypto exchanges and digital wallets, potentially creating blind spots for regulators and financial authorities.

It warned that monitoring systems designed around traditional financial intermediaries may not fully capture these transactions, complicating efforts to assess capital flows and financial risks.

The report also highlighted concerns about illicit financial activities, noting that the speed and relative anonymity offered by some digital asset platforms could increase vulnerabilities to money laundering and other forms of financial crime.

IMF recommends balanced regulatory approach

Rather than imposing outright restrictions, the IMF urged policymakers to adopt a balanced strategy that addresses the underlying factors driving stablecoin adoption while strengthening oversight.

The Fund recommended maintaining a stable and credible naira through sound macroeconomic policies, enhancing regulatory clarity for stablecoin issuers, and aligning oversight frameworks developed by the CBN and the Securities and Exchange Commission (SEC) with evolving international standards.

It also called for improved data collection through blockchain analytics and enhanced reporting of naira-to-stablecoin conversions, alongside continued investments in payment infrastructure to make regulated financial channels more efficient and competitive.

  • “Stablecoins are a response to persistent frictions in cross-border payments,” the IMF noted. “The policy challenge is to narrow the gap that made the workaround attractive, while ensuring new risks remain contained.”

What You Should Know

The IMF’s concerns come as cryptocurrency adoption continues to rise in Nigeria.

A recent report by cross-border payments company Thunes, produced in partnership with Juniper Research, found that approximately 40% of Nigerians now use cryptocurrency for international money transfers.

Nigeria was also identified as one of the world’s most innovative markets for cross-border payments in the inaugural Cross-Border Payments Interoperability Index, reflecting the growing role of digital assets in facilitating international transactions.