The Central Bank of Nigeria (CBN) is moving to strengthen its oversight of stablecoins by developing infrastructure that could allow it to monitor transactions on approved blockchain networks in real time.
The plan is contained in the CBN’s Payments System Vision 2028 (PSV 2028), unveiled on June 1, 2026. Under the framework, the apex bank intends to deploy observer nodes on blockchain networks hosting approved stablecoins, giving it a direct view of how the digital assets are created, transferred and redeemed.
An observer node is essentially a computer connected to a blockchain network that maintains a copy of its records and monitors transactions. Unlike nodes responsible for processing transactions, an observer node is designed primarily for surveillance and does not alter activity on the network.
For the CBN, the proposed system would reduce its dependence on information supplied by stablecoin issuers and provide an independent view of activity taking place on the blockchain.
Stablecoins are blockchain-based digital currencies designed to maintain a stable value, usually by being pegged to currencies such as the US dollar or naira. Where a stablecoin is backed by the naira on a one-to-one basis, its issuer is expected to maintain equivalent reserves with approved financial institutions to support customer redemptions.
The CBN says Nigerians are increasingly using stablecoins for remittances and as protection against fluctuations in the value of the naira, with a significant portion of transactions taking place through informal and peer-to-peer channels.
The proposed monitoring framework is therefore part of a broader effort by the regulator to bring stablecoins into Nigeria’s formal financial system while maintaining visibility over their circulation.
Stablecoin activity is becoming harder to ignore
Stablecoins and other digital currencies have moved beyond being a niche technology in Africa, with their use expanding across remittances, retail payments and cross-border business transactions.
According to blockchain analytics firm Chainalysis, digital currencies accounted for an estimated $205 billion in transaction flows across Sub-Saharan Africa between July 2024 and June 2025.
Nigeria has also recorded significant peer-to-peer stablecoin activity. A report cited in the source estimated Nigeria’s 24-hour stablecoin P2P transfer volume on centralised exchanges at $48.2 million in 2025, highlighting the growing role of digital assets in moving money across the country.
The CBN has consequently begun building a regulatory structure around the sector. Its regulatory sandbox now includes stablecoin issuers and other virtual asset service providers, while its PSV 2028 proposes licensing fiat-backed stablecoins and establishing reserve requirements for foreign-currency-backed tokens.
The central bank’s proposed observer-node system would give it another layer of oversight.
How the CBN plans to monitor stablecoins
The CBN is evaluating what it calls a “RegTech Node”, a read-only infrastructure that would allow the regulator to observe approved stablecoin networks without interfering with transactions.
Under the proposed framework, licensed stablecoin issuers would be required to incorporate several features into their systems.
These include smart-contract mechanisms capable of recording the creation, destruction and redemption of tokens; designated addresses through which the regulator can access relevant information; blockchain-linked proof of reserves; and disclosure of source code and approved smart contracts.
The objective is to enable the CBN to determine how many tokens are in circulation, where they are moving, whether the underlying reserves correspond with the supply and which smart contracts are responsible for issuing the tokens.
The system could also help the regulator identify unusual activity, including sudden increases in token supply, concentrated wallet movements or rapid redemption activity.
However, blockchain monitoring has important limitations.
Blockchain can track wallets, but not necessarily people
While an observer node can show the CBN which wallet sent or received funds, it cannot automatically reveal the identity of the individual or organisation controlling that wallet.
The regulator could connect blockchain addresses to individuals where those wallets are linked to regulated exchanges or virtual asset providers that have conducted Know Your Customer (KYC) or Know Your Business (KYB) checks.
However, non-custodial wallets present a much greater challenge because their owners may not have undergone identification procedures through regulated platforms.
The same limitation applies to reserves.
A blockchain can establish that a particular number of stablecoins exist, but it cannot independently prove that the issuer actually holds an equivalent amount of money in an eligible bank account.
This means blockchain surveillance would still need to operate alongside reserve requirements, attestations, audits and other forms of traditional financial supervision.
Multi-chain networks could complicate the CBN’s plan
Another major challenge is that stablecoins are not usually confined to one blockchain.
Issuers can deploy the same stablecoin across several networks, allowing users to transact through different blockchain ecosystems. This means the CBN may need to monitor multiple networks simultaneously if it wants comprehensive visibility.
Networks such as Ethereum, Tron and BNB Chain can support observer-node monitoring, while others may require considerably more infrastructure, particularly when regulators need access to historical transaction data.
The CBN has anticipated this challenge in its PSV 2028 document. Where an approved stablecoin operates across several public blockchains, the proposed system could connect through a regulated intermediary network capable of aggregating information from different chains and presenting it through a single monitoring layer.
However, each additional blockchain could introduce different technical requirements, data formats and infrastructure costs.
The regulator could eventually limit approved stablecoins to a defined list of blockchain networks, or it could work with specialised technology companies and blockchain analytics providers to obtain the required data.
CBN faces enforcement challenge beyond technology
Although the technology required to monitor blockchain transactions already exists, the larger challenge for the CBN will be designing a framework that can be effectively implemented and enforced.
The regulator still has to determine which blockchains will qualify, whether the monitoring infrastructure will be built internally or outsourced, how cross-chain bridges and wrapped tokens will be treated, what information issuers must provide and who will bear the cost of maintaining the system.
The CBN also has to determine how it will handle changes to the underlying smart contracts used by licensed stablecoin issuers.
The proposed observer-node system therefore represents a significant step towards greater regulatory visibility over Nigeria’s growing stablecoin market, but its success will depend less on the ability to read blockchain data and more on how effectively the CBN connects that information with identities, reserves and enforceable financial regulations.
Source: TechCabal | Emmanuel Nwosu
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