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.

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.

(Reporting by MacDonald Dzirutwe. Editing by Chijioke Ohuocha and Mark ‌Potter)

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