IMF Flags $59 Billion Crypto Inflows as Major Risk to Naira Stability and Monetary Policy Effectiveness
The International Monetary Fund (IMF) has issued a stark warning regarding the escalating adoption of stablecoins in Nigeria, asserting that this trend poses a significant threat to the demand for the naira and the efficacy of domestic monetary policy. This alert comes in the wake of Nigeria recording approximately $59 billion in crypto-asset inflows between July 2023 and June 2024, a figure underscoring the rapid integration of digital assets into the nation’s financial landscape.
In its report, titled “Stablecoins in Nigeria: A Growing Cross-Border Channel,” the IMF identifies the surge in dollar-pegged digital assets for payments, remittances, and savings as a direct consequence of Nigeria’s deeper macroeconomic challenges. These include persistent high inflation, acute foreign exchange scarcity, and continuous currency depreciation, which collectively render stablecoins an attractive alternative for preserving value and facilitating transactions amidst exchange rate volatility.
The IMF’s analysis, as reported by Nigeria CommunicationsWeek on June 17, 2026, highlights that the widespread utilisation of U.S. dollar-denominated stablecoins effectively constitutes a form of “digital dollarisation.” This phenomenon, the Fund cautions, could substantially diminish demand for the naira, thereby weakening the Central Bank of Nigeria’s (CBN) capacity to implement monetary policy through conventional tools such as interest rate adjustments and exchange rate interventions. Nigeria’s prominence in the digital asset market is further evidenced by its ranking among the top global adopters, securing second place in Chainalysis’ 2024 Global Crypto Adoption Index and sixth in the 2025 edition. The report also notes that Nigeria accounts for nearly 60 per cent of stablecoin inflows into sub-Saharan Africa since 2019, solidifying its dominant position in regional crypto activities.
While acknowledging the appeal of stablecoins in reducing transaction costs and accelerating cross-border payments, the IMF expresses concern over the potential for regulatory blind spots as payment activities increasingly migrate from traditional banking systems to crypto exchanges and digital wallets. This shift, the Fund warns, could complicate the monitoring of capital flows and elevate exposure to illicit financial risks, including money laundering.
Crucially, the IMF refrains from advocating restrictive measures. Instead, it calls for a balanced policy approach that tackles the underlying structural drivers of stablecoin adoption while simultaneously fortifying oversight frameworks. Key recommendations include maintaining macroeconomic stability to bolster the naira, enhancing regulatory clarity for stablecoin-related activities, and strengthening inter-agency coordination between the CBN and the Securities and Exchange Commission (SEC). The Fund also stresses the importance of improved transaction data collection through blockchain analytics and continued investment in efficient, regulated payment infrastructure. The IMF posits that stablecoin growth is largely fuelled by inefficiencies in cross-border payment systems, urging policymakers to focus on bridging these gaps while effectively containing emerging risks.
In a separate development highlighting technological advancements in financial services, VeendHQ announced that its AI-powered credit platform, Vida AI, achieved a significant recovery rate in a pilot program. The platform helped recover N69 million from a N172.5 million portfolio of loans that were over 90 days overdue, demonstrating the growing role of technology in loan recovery and portfolio management. This achievement comes at a time when lenders face mounting pressure to enhance recovery outcomes while managing the associated costs, reputational risks, and operational burdens of delinquent loans.
VeendHQ reported a 40 percent recovery rate on the overdue loan portfolio during the pilot, a figure that substantially outperforms traditional recovery benchmarks, where a five percent recovery rate on a similar loan book would yield approximately N8.6 million. The company asserts that this pilot showcases Vida AI’s capability to support lenders beyond credit assessment, extending its utility into repayment monitoring, collections, and recovery processes. Olufemi Olanipekun, co-founder and CEO of VeendHQ, stated, “Credit access is only one side of lending. The bigger challenge for many lenders is what happens after disbursement. Vida AI helps lenders make smarter decisions across the credit lifecycle, from approval to repayment and recovery.”
VeendHQ, a Nigerian fintech firm focused on building digital credit infrastructure, developed Vida AI as an artificial intelligence-powered platform designed for lenders, merchants, and financial institutions. The platform encompasses credit assessment, identity verification, repayment collections, and loan management workflows. With this recovery pilot, VeendHQ is positioning Vida AI as a critical tool for lenders seeking to improve repayment performance and manage overdue portfolios more efficiently, moving beyond its initial focus on loan origination.
Delinquent loans represent a substantial cash-flow challenge for lenders, with recovery becoming increasingly difficult, expensive, and unpredictable once loans exceed 60 to 90 days past due. Traditional recovery methods, such as manual calls, recovery agents, and legal escalations, often incur higher costs without commensurate improvements in recovery rates. VeendHQ explained that Vida AI’s recovery workflow allows lenders to upload overdue loan records, verify borrower information, assess repayment capacity, and initiate automated recovery actions, thereby providing lenders with enhanced post-disbursement visibility and enabling recovery teams to prioritise overdue portfolios more effectively.
Olanipekun emphasised the broader economic implications: “If lenders cannot recover efficiently, they become more conservative with lending. That affects consumers, small businesses, and the wider credit market. Better recovery infrastructure gives lenders more confidence to lend, manage risk, and keep credit flowing.” The company highlighted the relevance of this recovery use case for banks, microfinance institutions, digital lenders, cooperatives, and merchants managing loans that are 60 to 180 days past due. VeendHQ plans to further enhance Vida AI’s recovery capabilities for credit providers aiming to improve recovery performance without relying solely on manual methods. Olanipekun concluded, “As lending expands across Nigeria and Africa, recovery infrastructure is becoming as critical as origination. Tools that improve both will define which lenders can scale sustainably.” The pilot, VeendHQ suggests, signals a fundamental shift in the credit market, where approval speed alone is insufficient; lenders will increasingly be distinguished by their effectiveness in monitoring repayment, recovering overdue loans, and managing portfolio risk over time.
In a significant regulatory move, the Central Bank of Nigeria (CBN) has directed banks, fintech firms, and other payment service providers to store payment transaction data generated within the country on local servers, effective January 1, 2027. This directive, outlined in a circular from the Payments System Supervision Department, aims to strengthen oversight of the rapidly expanding digital payments ecosystem. The circular also introduces new market structure rules, beneficial ownership disclosure requirements, and systemic oversight measures for payment service operators.
The CBN stated that these reforms are necessitated by the rapid expansion of electronic payments and digital financial services across Nigeria, which has led to significant structural developments within the payments ecosystem. While acknowledging the growth’s positive impact on innovation, efficiency, and financial inclusion, the apex bank also noted concerns regarding market concentration, operational dependence, ownership transparency, and the storage of critical payments data. To address these issues, the CBN mandates that all financial institutions facilitating payments in Nigeria ensure that transaction data generated within the country is stored and managed domestically, in compliance with applicable data protection laws and regulations. This move is expected to bolster regulatory oversight, enhance data sovereignty, and ensure that sensitive payment information remains within Nigeria’s jurisdiction, aligning with global trends in localising critical financial data.
Beyond data localisation, the CBN has mandated that institutions with digital payment operations disclose the ultimate beneficial ownership of significant shareholders. These institutions must maintain accurate records of their beneficial owners and make this information available to the CBN upon request, in line with anti-money laundering, counter-terrorism financing, and counter-proliferation financing regulations. This directive reinforces previous CBN efforts to enhance beneficial ownership transparency and combat illicit financial flows.
Furthermore, the central bank has introduced new competition rules designed to curb excessive market dominance in the payments industry. Under the new framework, financial institutions controlling over 25 percent of the card-issuing market in a rolling 12-month period will be restricted to a maximum of 15 percent of the merchant-acquiring market during the same period, and vice versa. Merchant acquiring involves processing card payments for merchants, while card issuing pertains to providing payment cards to customers. Regulated entities will be required to submit monthly market share returns, with full compliance with these market structure requirements expected by December 31, 2026. The CBN stated that these measures are intended to “improve transparency through beneficial ownership disclosure, address concentration risk, promote a fair, competitive, and resilient payments ecosystem,” and safeguard the integrity of the Nigerian payments system. The CBN has warned that it will closely monitor compliance and impose sanctions where necessary. This directive arrives amidst a period of rapid expansion in Nigeria’s digital payments industry, with regulators intensifying oversight to address operational, cybersecurity, and systemic risks.
