Stablecoins gain in Nigeria for cross-border transfers, IMF says

LAGOS, June 16 (Reuters) – Nigerians are increasingly turning to U.S. dollar-pegged digital tokens, or stablecoins, to move money ​across borders, as households and small businesses ‌seek cheaper and faster alternatives to traditional channels, the IMF said on Tuesday.

The Fund said what began as a ​niche crypto use has grown into a significant payments ​route, with Nigeria receiving about $59 billion in crypto ⁠inflows between July 2023 and June 2024 ​and accounting for roughly 60% of stablecoin inflows in ​sub-Saharan Africa.

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Stablecoins – cryptocurrencies pegged to assets and designed to hold a stable value – have gained global traction, backed in part by support from U.S. President ​Donald Trump.

Their price stability, combined with fast transfers via smartphones ​and digital wallets, has driven rapid adoption in Nigeria, the IMF ‌said.

For users, ⁠they offer near-instant cross-border payments and a way to store value outside a volatile naira currency, effectively bridging crypto markets and traditional finance.

They can also undercut conventional ​remittance channels, where ​sending $200 to ⁠sub-Saharan Africa costs on average about 9% of transaction value, compared with a global average of ​6%, said the IMF, citing World Bank ​data.

However, their rise poses policy ⁠challenges.

Widespread use of dollar-linked tokens could weaken monetary policy by reducing demand for the naira, while shifting ⁠transactions ​to digital wallets complicates oversight ​and raises the risk of illicit flows, the IMF said.