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IMF Flags Nigeria's Crypto Growth as FX Stability Risk
The International Monetary Fund (IMF) has issued a fresh warning about Nigeria's rapidly growing crypto sector, cautioning that increased digital asset usage could pose significant risks to the country's efforts to stabilize its foreign exchange (FX) market.
The concern was raised in the IMF's latest Article IV Consultation Report, published in July, 2025, which analyzes Nigeria's macroeconomic environment, fiscal outlook, and monetary policies. The report highlights crypto adoption as one of the "emerging pressures" undermining the effectiveness of the Central Bank of Nigeria's (CBN) managed float FX system.
According to the IMF, the naira's persistent depreciation and limited access to U.S. dollars through official channels have driven more Nigerians toward using crypto as an alternative store of value and cross-border payment method. The IMF estimates that between $5 billion and $7 billion worth of crypto transactions were conducted by Nigerians in the first half of 2025, much of it through peer-to-peer (P2P) networks that bypass official FX reporting mechanisms.
Nigeria ranks among the top 3 countries globally in crypto adoption, according to Chainalysis' 2024 Global Crypto Index. Popular platforms such as Binance, KuCoin, and local players like Roqqu and Patricia have seen soaring usage especially in the wake of multiple devaluations of the naira and tightening FX rules. In February 2025, the Nigerian government banned the naira-to-USDT pair on local exchanges, citing regulatory and national security concerns. Despite that, P2P platforms and stablecoins like USDT and cUSD continue to thrive in informal financial circles.
The IMF's report also indirectly references Nigeria's compliant stablecoin initiative, cNGN, which launched officially and is now live on CoinMarketCap. The stablecoin, backed by regulated Nigerian banks, aims to offer a transparent, CBN-aligned alternative to foreign stablecoins like USDT and BUSD. Nigeria is walking a tightrope between promoting digital innovation and protecting the naira from speculative attacks and dollar substitution and Nigeria's crypto experiment is being closely watched by other developing economies dealing with similar FX instability.
The IMF argues that if crypto activity continues to operate in the shadows, it could weaken trust in the CBN's efforts to manage exchange rates. In response to the IMF's observations, the Central Bank is expected to:
- Intensify KYC/AML enforcement for P2P trading platforms.
- Promote the adoption of the cNGN stablecoin across fintechs and exchanges.
- Release updated crypto regulatory guidelines in collaboration with the Nigerian SEC by Q4 2025.
As crypto becomes more embedded in Nigeria's financial fabric, regulators face a growing dilemma on how to harness its benefits without compromising macroeconomic stability. The IMF's latest warning adds urgency to the conversation, especially as the cNGN project gains traction.