Introduction

After swinging back and forth between acceptance and rejection, Nigeria is finally set to recognise crypto assets via a new bill recently passed by lawmakers, and now awaiting President Bola Tinubu’s signature.

The 2025 Nigerian Investment and Securities Bill will replace the law passed in 2007, now considered obsolete in the light of global developments. Under the new law, a crypto asset is defined as “a digital representation of value that can be transferred, digitally traded and used for payment or investment purposes.”

This definition does not recognise digital versions of fiat money as crypto assets. It also gives legal backing to platforms and exchanges used for trades, management and safe storage of virtual and digital assets.

Stablecoins in Africa 

Stablecoins are now a crucial part of Sub-Saharan Africa’s crypto economy, representing around half of the region’s total transaction volume. In nations struggling with unstable currencies and limited access to US dollars, dollar-pegged tokens like Tether and USDC are helping businesses and individuals manage value and carry out international trade.

Due to foreign exchange shortages, with so many African countries affected, many are turning to stablecoins as an alternative to traditional financial systems. Experts believe stablecoins will continue to shape the region’s financial future. 

Stablecoins are becoming increasingly popular worldwide. They are a kind of cryptocurrency designed to minimize the price volatility typically associated with most cryptocurrencies. They are pegged to a stable asset such as a fiat currency or a commodity like gold. There are 4 types of stablecoins; fiat-backed stablecoins e.g. Tether (USDT), crypto-backed stablecoins e.g. DAI, commodity-backed stablecoins e.g. Tether Gold (XAUT), and algorithmic stablecoins e.g. FRAX. USDT is the most popular and widely used stablecoin.

Africa has seen massive growth in crypto adoption in recent years. Stablecoins in particular have been a catalyst for financial innovation and a solution for cross-border payments. 

Use cases for stablecoins for global businesses operating in Nigeria

1. Remittances & Cross-Border Payments: Stablecoins facilitate cheaper and faster remittances and cross-border payments, especially when compared to traditional banks. It has become a preferred option as it benefits both sender and receiver.

2. E-commerce & International Trade: Stablecoins have become an option for payments for both large and small e-commerce businesses, providing a secure and fast way for customers to pay for goods and services from anywhere in the world. Import-Export businesses are also increasingly adopting stablecoins to facilitate payments and settlements internationally.

3. Tokenization of Assets: Stablecoins provide a stable value reference in the process of tokenization, which is the representation of real-world assets on the blockchain.

At TransFi, we support a number of industries and sectors. Are you a global company operating in Nigeria or a Nigerian business planning to expand globally? If you are looking for a reliable, compliant payment partner to do business with, TransFi is the right one for you, providing ease of stablecoin and crypto payments packaged with a whole lot of other resources for smooth finances for your business. 

Factors that promote usage of Stablecoin in Nigeria

Bitcoin was initially looked upon with scepticism and associated with Ponzi schemes. Scams were commonplace in Nigeria and Bitcoin was often used as a tool for the victims of the scams to make payments as such Bitcoin was not separated in the perception of the people from these scams. The tables have turned around now;

1. The official exchange rate in Nigeria of the Naira to foreign currencies is set by the Nigerian Central Bank, and thus not by forex markets. The central bank tends to devalue the Naira against other currencies. This devaluation is a factor that causes Nigerians to look elsewhere to preserve the value of the money they earn.

2. Transferring money from and to Nigeria is very costly using the traditional banking system, and cryptocurrency provides an alternative to the high fees experienced there.

3. Following the freezing of bank accounts for cryptocurrency-related activities, many Nigerians were willing to continue to use cryptocurrencies where they can and that they will switch to using peer-to-peer transactions.These bypass traditional banks entirely because cryptocurrencies are sent from one person decentralised wallet to another.

Benefits of Stablecoin payments in Nigeria

Digital assets enable real-time transfers

Digital assets can take many forms, including natively digital assets such as BTC and ETH or tokenized assets such as stablecoins and other traditional assets. 

Tokenized currencies such as USDC and USDP allow you to reap the benefits of a traditional cash payment, like value stability, while leveraging the benefits of blockchain technology like real-time settlement, visibility, and transparency.

No matter what kind of asset you’re using, stablecoins have the potential to disrupt the traditional model by enabling the real-time transfer of value. When utilizing digital assets to pay someone across the globe, transactions can be made directly between two parties, removing intermediaries and the issues traditionally associated with international payments. 

Stablecoins and Digital assets know no bounds

One of the main reasons why digital assets are ripe to disrupt international financial services is because of the utility they pose in the transfer of value across borders. Unlike traditional fiat currencies, digital assets know no bounds; that’s why cross border crypto payments could bring enormous benefits, where currently international payments tend to be slow and expensive. In general, cross border payments are bogged down by legacy payment infrastructure, leading to delayed settlement times and high fees. 

Transfi accepts stablecoin cross border payments from customers all around the globe according to their convenience. Today, a customer can pay us in any stablecoin and we can convert it to USDC and we can convert it to your desired currency at fingertips. This is in contrast to traditional international payments, which continue to create extra costs and headaches for our accounting team. Our usage of stablecoins for cross border B2B payments from our customers is just one example of digital assets’ utility in the field of international payments.

Conclusion 

Blockchain technology has transformed crypto cross border payments, offering a faster and more affordable solution compared to traditional banking systems. Traditional international transfers involve high fees, slow processing times, and multiple intermediaries. With blockchain, however, blockchain cross border payments can bypass these hurdles, enabling direct peer-to-peer transactions at a fraction of the cost.

One of the primary benefits of Stablecoin cross border payments is the significant reduction in transaction fees. Traditional wire transfers often come with steep charges, especially when multiple banks are involved. Blockchain eliminates intermediaries, reducing fees and making cross border transfers more economical, particularly for frequent transactions.

Speed is another key advantage. Traditional payment systems can take several days to process cross border transfers, especially across different currencies. Blockchain, however, enables near-instant transactions, with settlement times typically in minutes rather than days. This speed is crucial for businesses that rely on quick payments to maintain cash flow.

When choosing the best crypto for cross border payments, options like Bitcoin and Ethereum are popular, but newer cryptocurrencies are gaining attention due to their lower transaction costs and faster speeds. These cryptos are often considered ideal for crypto cross border payments, offering both efficiency and cost-effectiveness.

‘Cryptocurrencies can have a positive effect by acting as a disciplining device to central banks. Currency competition can succeed in calming inflation and preventing the sort of manipulation of interest rates and prices to which governments have historically been prone.’

Also read: Business Use Cases for Stablecoins: From Remittances to Treasury

Frequently asked questions (FAQs)

1. What are the challenges that hinder the development of a more robust and digitalized cross-border payment system for Nigeria?

One challenge is related to correspondent banking. Fintech firms and other non-bank financial intermediaries often have difficulties in finding correspondent banks willing to work with them to execute cross-border transactions. Another challenge is that the prudential regulation applicable to Fintech firms tends to be laxer than the regulation applied to commercial banks for similar products and services, causing distrust among banks and even concerns about unfair competition and regulatory arbitrage. Finally, the occurrence of scams and fraudulent activities for users of Fintech companies has created distrust among segments of the population. Under this environment, crypto remains an attractive alternative for many users for their cross-border payment needs.

2. Is Nigeria moving towards a cashless economy? 

Nigeria has already moved in that direction. The enhancement of mobile and contactless payments during the last few years has made digital transactions the preferred method both by businesses and customers. Companies are encouraged to use the innovative Transfi's payment solutions to help them adapt to the constantly changing payment market. The economy is also moving towards crypto and stablecoin payment solutions making it a booming solution in Nigeria.

3. What are the benefits of stablecoin payments in Nigeria?

Digital assets and stablecoins enable real-time transfers and they are not bound by borders and high operational costs. 

4. What are the use cases for stablecoins for global businesses operating in Nigeria?

• Remittances & Cross-Border Payments
• E-commerce & International Trade
• Tokenization of Assets

5. What’s the current status of stablecoins in the African economy?

Stablecoins are now a crucial part of Sub-Saharan Africa’s crypto economy, representing around half of the region’s total transaction volume. In nations struggling with unstable currencies and limited access to US dollars, dollar-pegged tokens like Tether and USDC are helping businesses and individuals manage value and carry out international trade.