Stablecoins: IMF Says Nigeria's $59B Channel Carries Risk, BIS Says They Trade Like ETFs

Stablecoins have become a "meaningful cross-border payments channel" in Nigeria, accounting for roughly 60% of stablecoin inflows into sub-Saharan Africa since 2019, according to a June 16 country focus report from the International Monetary Fund. The IMF estimated Nigeria received around $59 billion in crypto-asset inflows between July 2023 and June 2024 and linked the adoption to "the sharp depreciation of the naira, high inflation, and constrained access to foreign exchange" in 2023 and 2024, which boosted demand for dollar-linked assets. Activity has also migrated toward peer-to-peer and less regulated channels since the Central Bank of Nigeria restricted banks from servicing crypto exchanges in 2021.

The IMF acknowledged stablecoins deliver "clear benefits," including cheaper cross-border remittances and expanded financial access, but flagged monetary sovereignty and financial integrity concerns. It warned that dollar-pegged tokens could amount to a "digital form of dollarization," weakening the naira and reducing the effectiveness of domestic monetary policy. "Attempts to suppress stablecoin use are likely to be only partly effective," the report said, recommending instead that Nigeria combine blockchain analytics with reporting on naira-stablecoin conversions, tighten oversight and upgrade payment infrastructure "to reduce reliance on unregulated channels." The fund also encouraged alignment with stablecoin frameworks emerging in the European Union, Singapore, Hong Kong, Japan and the United States.

The Bank for International Settlements delivered a parallel warning in its Annual Economic Report published Sunday, assessing the approximately $316 billion stablecoin market and concluding the tokens "resemble exchange-traded fund (ETF) shares rather than means of payment." BIS noted that tokenized fiat currencies "settle neither directly nor indirectly on central bank balance sheets" and "cannot currently ensure exchange at par across issuers and blockchains under all conditions," with redemption delays and price deviations from $1 mirroring ETF behaviors. The Basel-based institution cautioned that stablecoin transfers could weaken monetary sovereignty, erode domestic policy effectiveness, reduce bank intermediation and expose economies with weaker currencies to volatile cross-border capital flows.

BIS also argued that a significant migration from commercial bank deposits into private digital tokens could shrink bank funding and constrain credit to the real economy, and it urged faster development of tokenized commercial bank deposits alongside tokenized central bank money on regulated infrastructures. The report delivered one of BIS's strongest critiques of public permissionless blockchains such as Bitcoin ($BTC) and Ethereum ($ETH), arguing their fee-based validator economics make congestion, longer confirmation times and higher costs structural rather than incidental. The IMF has issued similar cautions in recent weeks, urging "close monitoring" of crypto adoption in Nepal and warning of risks tied to "circumvention of capital controls or large-scale deposit outflows."