Nigeria Bans Interest on Stablecoins and Makes Form M Mandatory for Import Payments

November 8, 2026 MM Crypto Team

Nigeria has taken one of its firmest steps yet toward bringing stablecoins inside the formal financial system, and the new rules draw a sharp line between using a stablecoin as money and using one as an investment. The Central Bank of Nigeria has introduced restrictions that prohibit stablecoin issuers from paying interest or investment returns to token holders, while making Form M compulsory for certain import payments conducted with foreign-currency stablecoins. For a country where dollar-pegged tokens have become a familiar part of everyday finance, the change affects issuers, traders, importers and ordinary holders alike.

The requirements are set out in the CBN’s Regulations for the Operations of Non-Security Virtual Assets in Nigeria, released on Friday, November 6, with the framework taking effect on November 5, 2026. The document is a broad regulatory framework for virtual assets that fall outside the securities category, and its stablecoin provisions are among the most detailed parts. This article focuses on the interest ban, the Form M requirement and the reserve rules, which are the newest elements for readers to understand. The framework’s capital requirements for issuers were covered separately on this site on November 7, and they appear here only as background.

What the CBN stablecoin interest ban says

The centrepiece of the new rules is Section 13.3, which specifically prohibits issuers from paying, offering, arranging or facilitating financial returns to stablecoin holders. The wording matters because it is deliberately wide. It does not only ban the direct payment of interest. It also covers offering returns, arranging them through a third party, or facilitating them in any way. An issuer cannot sidestep the ban by routing a yield through a partner, a rewards programme or a differently labelled product. If the economic effect is a financial return to the holder for simply holding the token, the regulation treats it as prohibited.

The rule is paired with a disclosure duty. Issuers must provide written disclosures informing customers that holding tokens does not entitle them to interest or investment income, and that stablecoins are not bank deposits and are not protected by the Nigeria Deposit Insurance Corporation, known as the NDIC. A bank deposit in Nigeria carries deposit insurance protection, while a stablecoin does not, and the CBN wants that difference stated plainly before anyone treats the two as equivalent.

Behind the ban sits a clear distinction. The regulation distinguishes payment stablecoins from digital assets designed to generate investment returns. A payment stablecoin, in the CBN’s framing, is a tool for moving value: a digital representation of money that can be sent, received and used to pay for things. A return-generating asset, by contrast, is a product whose purpose is to earn its holder money. The two may look similar on a phone screen, but the regulation treats them as different things with different rules. Issuers that want to offer returns will need a different regulatory footing from issuers that simply offer a payment token.

Reserve rules: what issuers cannot do with backing assets

The second pillar of the new framework concerns reserves, the assets that back a stablecoin and give it its value. Under Section 13.4, issuers are prohibited from using reserve assets to finance operational expenses, provide loans, participate in staking or serve as collateral for borrowing and other leveraged transactions. In plain terms, the money backing the stablecoin must stay where it is, available to meet redemptions, and it cannot be put to work to earn the issuer extra income or to fund the business.

Each prohibited use addresses a real risk. Using reserves to pay running costs would slowly drain the backing behind each token. Lending reserves out would expose them to the risk that a borrower fails to repay. Staking, the practice of locking crypto assets to support a network in exchange for rewards, would tie reserves up and expose them to price and protocol risk. Using reserves as collateral for borrowing would mean the same assets were promised to two parties at once.

Form M becomes mandatory for Class 2 stablecoin import payments

The third major change reaches beyond crypto markets into the world of physical trade. Under Section 11.10.5(a), payments for imported goods made with Class 2 stablecoins must be supported by a valid Form M. Class 2 stablecoins are the foreign-currency-referenced tokens in the framework, the category that covers dollar-pegged tokens used for cross-border payments. Form M is the established Nigerian documentation for imports, the form through which an importer declares goods, their value and their source before payment is made.

The effect is to bring stablecoin import payments into the same documentary discipline as conventional foreign-exchange payments. An importer who pays a foreign supplier with a dollar stablecoin must now hold a valid Form M for the transaction, just as they would when paying through a bank. For regulators, that closes a gap: stablecoin payments could previously move outside the paperwork trail that tracks what is imported, at what value, and from whom. For importers, it adds a compliance step to a payment method many chose precisely because it was fast and light on paperwork.

Who the rules apply to, and how the transition works

The framework gives existing operators time to comply. Existing operators have 180 days from commencement to apply for the appropriate licence, a window that recognises that established businesses cannot restructure overnight. Licensing, capital, disclosures and reserve practices all need to be brought into line, and the six-month window is the period in which that work is expected to happen. Operators who miss the window risk operating without the required authorisation, and that is a position no serious issuer will want to be in.

The framework also sets out the background capital rules that define its two classes of issuer. Class 1 naira-referenced stablecoin issuers need minimum paid-up capital of N10 billion, while Class 2 foreign-currency-referenced issuers need N15 billion, about $11 million. The capital thresholds are the entry ticket; the interest ban, reserve rules and Form M requirement are the conduct rules that apply once an issuer is through the door.

Two further features of the framework are worth noting. Algorithmic stablecoins are prohibited outright, which removes a category of tokens whose peg depends on software mechanisms rather than reserves. And a stablecoin may be designated systemic if its naira-equivalent circulating supply exceeds N500 billion daily for 30 consecutive days, or if more than five million people in Nigeria hold or use it. Systemic designation would bring a token under closer scrutiny, reflecting the risk that a widely used stablecoin could affect the wider financial system if it ran into trouble.

Peer-to-peer platforms are also covered. Peer-to-peer platforms facilitating regulated peer-to-peer transactions must obtain CBN authorisation and verify that the name and BVN on the naira payment account match the verified customer. BVN, the Bank Verification Number, is Nigeria’s biometric identity system for bank customers, and the matching requirement ties a naira payment back to a verified person. For the many Nigerians who buy and sell crypto person to person, this is a meaningful change, because it links the informal market to formal identity checks.

What this means for USDT, USDC and ordinary holders

The most immediate question for users is what happens to the tokens they already hold. Techpoint Africa reported on November 7 that widely used tokens such as Tether’s USDT and Circle’s USDC did not yet qualify under the new Class 2 arrangement because the required Nigerian licences had not been issued. That does not mean the tokens are banned in Nigeria, but it does mean their issuers have not yet met the framework’s licensing requirements for Class 2 stablecoins, and the path to qualification runs through the licence application process within the 180-day window.

For ordinary holders, the practical effects are narrower than the headlines may suggest. Holding a stablecoin remains possible, and using one to pay or transfer value is still its core purpose. What changes is the expectation around it: no interest or investment return for holding, no assumption of deposit insurance, and, for importers, a Form M behind any Class 2 payment for goods. Holders should read the written disclosures their issuer provides, and they should understand that a stablecoin is a payment instrument, not a savings account.

FAQ

What exactly has the CBN banned on stablecoin interest?

Section 13.3 of the CBN’s Regulations for the Operations of Non-Security Virtual Assets in Nigeria prohibits issuers from paying, offering, arranging or facilitating financial returns to stablecoin holders. Issuers must also disclose in writing that holding tokens does not entitle holders to interest or investment income.

Are stablecoins protected like bank deposits in Nigeria?

No. Issuers must disclose that stablecoins are not bank deposits and are not protected by the Nigeria Deposit Insurance Corporation, the NDIC. A stablecoin’s value depends on its issuer and its reserves, not on deposit insurance.

What can issuers not do with stablecoin reserves?

Under Section 13.4, issuers are prohibited from using reserve assets to finance operational expenses, provide loans, participate in staking or serve as collateral for borrowing and other leveraged transactions. Reserves must remain available to back redemptions.

When is Form M required for stablecoin payments?

Under Section 11.10.5(a), payments for imported goods made with Class 2 stablecoins, the foreign-currency-referenced category, must be supported by a valid Form M. The rule brings stablecoin import payments into the same documentary discipline as conventional foreign-exchange payments.

Do USDT and USDC qualify under the new Nigerian rules yet?

Not yet. Techpoint Africa reported on November 7 that widely used tokens such as Tether’s USDT and Circle’s USDC did not yet qualify under the new Class 2 arrangement because the required Nigerian licences had not been issued. Existing operators have 180 days from commencement to apply for the appropriate licence.

Source: 9jaPolyTv

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