Oduwacoin founder lauds CBN over plan to regulate stablecoin

Oduwacoin founder, Bright Enabulele has lauded the Central Bank of Nigeria (CBN) over its plan to develop a regulatory framework for stablecoin in the country.

The CBN had in a report on ‘Nigeria payments system vision 2025’, disclosed its plan to regulate digital financial assets in spite of earlier banning cryptocurrency-related transactions in the country’s banking system.

“The CBN would consider the development of a regulatory framework for potential implementation of ‘Stablecoins,” the report read.

The apex bank also said in order to develop a regulatory framework that is effective, it “would also continue its brief on Initial Coin Offerings as well as work with Security Exchange Commission (SEC) to jointly develop it in the event of adoption of an ICO-based investment solution.”

Reacting to this development, Enabulele, who’s a renowned cryptocurrency evangelist, expressed satisfaction with the central bank, as he stated that a developed regulatory framework would rid-out fraud in the system, and give room for legitimacy.

While maintaining that a regulatory framework is important in protecting people and their stablecoin assets, Enabulele advised people not to confuse it for floated assets.

According to him, there’s a difference between stablecoin and floating assets cryptocurrency.

“People mistake stablecoin for floated assets, and that’s what gave impetus to the criticism that greeted the central bank’s mulled plan to regulate the former. They are different,” he explained.

“I advise people against seeing stablecoin that is collaterised, as same as other digital assets that are decentralised, and whose values are determined by demands and supplies. In other words, stablecoin is a fixed asset cryptocurrency because they are collaterised -it is pegged to a source that actually exists, and its underlying value is usually taken from reserves.

“So, it is not surprising that most of these apex banks, including the CBN, have their eyes on stablecoin, considering its static value. If it is not regulated, who’s going to maintain the underlying assets in the reserves? Who’s going to even confirm that the assets actually exist?” the Oduwacoin founder queried.

“Most stablecoin in the market today are not collaterised. They are just floating assets – the value is supposed to be liquid from the get-go, (you issue one million USD Coin to conventional currencies like dollar/pound, that one million dollar should actually exist in a bank or reserve). So, the underlying authority should be able to confirm that such assets exist, because the liquidity may not, or can just disappear.

“We see a lot of stablecoin in the market today that are becoming scams, and their liquidity just disappears because the underlying assets that are supposed to be on the reserve, are not maintained, and regulated. Only a few stablecoin have local/state licenses.

“Because stablecoins are collateralised assets pegging to reserves, they should be regulated to make the underlying asset-backed coin exist. More so, aside from the fact that they are liquid, stablecoin is a security asset; anything security deals with regulations,” he added.

Enabulele concluded that the CBN should also be looking at implementation, and how the blockchain framework works.