The International Monetary Fund (IMF) has raised the alarm that the increasing use of United States dollar-denominated stablecoins in Nigeria poses risks to monetary sovereignty, potential‘digital dollarisation’, and other issues.
According to the IMF, the growing use of stablecoins for cross-border transactions in Nigeria brings opportunities and risks.
The IMF made this observation in its “2026 Article IV Consultation Staff Country Report on Nigeria,” where it also alleged that official actions taken by the Nigerian authorities had led to Multiple Currency Practices (MCPs), including multiple exchange rates over the past 12 months, and urged the Central Bank of Nigeria (CBN) to eliminate these multiple rates.
This is as the President of the Capital Market Academics of Nigeria (CMAN), Prof. Uche Uwaleke, has welcomed the latest IMF Article IV Consultation Report on Nigeria, but cautioned against adopting some of its recommendations, particularly those prescribing additional tax measures, including a possible hike in Value Added Tax (VAT), and their extension to petroleum products, among others.
However, the CBN has explained that what the IMF viewed as MCPs were actually “not part of exchange rate determination but a cost-recovery fee.”
The IMF said it identified two sources of MCPs from the use of the buying rate—determined by CBN as the previous day’s Weighted Average Exchange Rate (WAR) minus one Naira—for CBN foreign exchange (FX) purchases from Ministries, Departments and Agencies (MDAs) and oil/oil related companies.
It said that “as of April 27, 2026, the latest impermissible spread was observed on March 23, 2026.”
The second source of MCPs, according to the IMF, was the use of the selling rate—determined by CBN as the previous day’s WAR plus a 2.0 percent commission for CBN FX sales to MDAs.
It said: “As of April 27, 2026, the latest impermissible spread was observed on April 22, 2026.
“Staff encourages the authorities to eliminate these official actions,” it said.
The IMF, however, noted that the CBN had explained that “it does not consider the official actions MCPs.”
The CBN, according to the IMF report, said that the 2.0 per cent commission applied to FX sales to MDAs was not part of exchange rate determination but rather a cost-recovery fee.
“In addition, the CBN noted that the N1.00 (one Naira) adjustment applied to FX purchases from MDAs and oil companies reflects a narrow bid-side spread consistent with standard market-making practices, accounting for liquidity provision, inventory risk, and settlement costs.
“They (CBN) also noted that the official actions impact only a small share of total turnover.”
Yet, the IMF insisted that “given that these charges are viewed as MCPs under the IMF framework, the CBN would review and take necessary actions.”
The IMF also urged the CBN to phase out the remaining capital flow management (CFM) measures as macroeconomic conditions permit.
It said: “Staff welcomes that, in March 2026, the CFM on the requirement for International Oil Companies (IOCs) to hold 50 per cent of repatriated export proceeds in Nigeria for 90 days before transferring offshore has been eliminated.
“The authorities have indicated that they intend to phase out the three remaining outflow CFMs. These are bans on FX purchases on the Nigerian FX market for the purpose of investing in FX securities abroad.
“Another is payment limits on naira-denominated credit and debit cards for overseas transactions, and thirdly, the net open positions limit of the overall FX assets and liabilities should not exceed 20 per cent short or zero per cent long of shareholders’ funds.
The report stated that in line with the IMF’s institutional view, “these CFMs should be phased out as FX pressures abate and macroeconomic and financial stability is restored.”
The IMF noted that the growing use of stablecoins for cross-border transactions in Nigeria brings opportunities and risks.
It said that “while stablecoins can improve payment efficiency, lower transaction costs, and improve financial inclusion, the increasing use of U.S. dollar-denominated stablecoins raises risks to monetary sovereignty, capital flow management, financial stability, and financial integrity by facilitating potential ‘digital dollarisation’ and cross-border transactions outside the formal financial system.”
It recommended that policy priorities should include maintaining confidence in the Naira through continued sound macroeconomic policies, strengthening oversight and supervisory capacity, and bringing stablecoin arrangements within the regulatory perimeter in line with international best practices, including robust licensing, consumer protection, and reporting requirements.
The IMF said that close coordination between the CBN and the Securities and Exchange Commission (SEC) is essential to ensure coherent oversight and avoid regulatory gaps.
Meanwhile, the President of CMAN, Prof. Uwaleke, has cautioned against adopting some of its recommendations, particularly those prescribing additional tax measures, including a possible increase in Value Added Tax (VAT) and its extension to petroleum products.
In an article titled “Interrogating the IMF’s 2026 Article IV Consultation Report on Nigeria,” which he made available to THISDAY, Uwaleke said that while many of the IMF’s positions were commendable, some policy prescriptions warranted closer scrutiny within the peculiar realities of the Nigerian economy.
The one-time commissioner for finance in Imo State flagged the recommendation that Nigeria might require additional tax policy measures over the medium-term, including possible increases in the VAT, its extension to fuel products, rationalisation of tax expenditures, reduction of exemptions, and introduction of telecommunications excise duties.
He argued that although the objective of enhancing revenue mobilisation was understandable, the timing and context of such proposals raise legitimate concerns.
According to him, Nigeria is currently experiencing one of the most severe cost-of-living crises in recent history, with households already contending with elevated food, transportation, energy, and housing costs, as well as declining purchasing power.
He said, “Increasing indirect taxes under such circumstances would likely exacerbate economic hardship, weaken consumer demand, and further strain household welfare. Tax policy must not be evaluated solely through the lens of revenue generation but also through its broader social and economic consequences.
“Before contemplating additional tax burdens, greater efforts should be directed toward improving tax administration, widening the tax net, reducing leakages, enhancing compliance, and stimulating economic growth, which naturally expands the revenue base.
“The cheering news is that all these have been addressed in the ongoing tax reforms. The proposal becomes even more problematic when viewed against the backdrop of the Federal Government’s reported plans to secure a $5 billion loan from an Abu Dhabi financial institution, with terms reportedly requiring collateral valued at about 133.3 per cent of the loan amount.
“Such financing arrangements raise serious questions regarding debt sustainability, asset security, and long-term fiscal prudence.
“While governments often require external financing to bridge fiscal gaps and fund development projects, borrowing should not come at the expense of excessive collateralisation that potentially compromises strategic national assets or future fiscal flexibility.
“The IMF’s concerns regarding complex financing instruments and fiscal transparency become especially relevant in this context.”
He backed the Fund’s call for stronger supervision of stablecoins and other crypto-assets, noting that the rapid growth of digital financial assets presents both opportunities and risks.
Ndubuisi Francis and Dike Onwuamaeze
