From Ban to Sandbox: Nigeria's CBN Eyes Stablecoin Startups

On August 31, applications closed for Cohort 2 of the Central Bank of Nigeria's Regulatory Sandbox, the first to include a dedicated track for Virtual Asset Service Providers, stablecoin issuers included. Selections have not been announced, and the CBN has not published a date for them. But whenever the names land, they will mark a first: Nigeria's central bank directly supervising live tests of stablecoin startups, five years after it ordered banks to close the accounts of anyone touching crypto.

That reversal did not happen in one move. It happened in about six, and the sequence matters, because it explains who now regulates what in Nigerian crypto and what a founder should actually do about it.

What the CBN opened, precisely

Cohort 2 ran a three-week application window, August 12 to 31, 2026, per the CBN's announcement as reported by Nairametrics and TechCabal. The CBN's sandbox portal sets out two tracks. The VASP track covers virtual asset and stablecoin services with payment, settlement or store-of-value functions: stablecoin issuance, virtual asset payments, digital wallets, custody, token products, fiat on- and off-ramps, and exchanges. A second, non-VASP track covers data-enabled financial services such as open banking, account aggregation and credit decisioning.

Eligibility is notably wide. The portal lists CBN licensees, licensees of other Nigerian regulators, foreign regulated entities, and, crucially, unlicensed startups. Applicants need a legally incorporated company with identifiable shareholders and beneficial owners, a solution the portal describes as sufficiently developed for controlled live testing, effective anti-money-laundering and related financial-crime controls (AML/CFT/CPF, an acronym that recurs through every document here) and consumer safeguards, and the technical capability to handle reporting and incident notifications.

Two things the sandbox is not. It is not a license: the CBN's own 2021 sandbox framework treats participation as supervised testing that precedes any full authorization. And it is not unbounded: approved participants operate within defined limits on user categories, transaction volumes, customer exposure and test duration. The specific caps for Cohort 2 have not been published.

The sandbox is supervised live testing with real users under caps. It is not a license, and the CBN has not yet published what authorization, if any, follows a successful test.

From ban to sandbox in six moves

The eNaira line in that table deserves a longer look. The CBN launched its own digital currency in October 2021, the first CBDC in Africa and among the first anywhere, and Nigerians largely declined to use it: a 2023 IMF working paper found roughly 1.5% of downloaded wallets transacting in any given week, and later reporting put active usage under 1% of the population (figures are as reported; precise current numbers are not published). Now the same institution is preparing to supervise privately issued stablecoins instead. cNGN, the naira-pegged stablecoin from Wrapped CBDC Ltd that launched on exchanges in February 2025 under SEC incubation, sits in the CBN's supervision pilot today. The state built a digital naira and nobody came; the private sector built one and the state is now building the supervision around it.

The Executive Order behind the sandbox

The sandbox is not a standalone CBN initiative. According to the State House release published July 18, 2026 (several outlets dated the signing July 17), President Bola Tinubu's Executive Order on Virtual Assets Coordination directs the CBN to establish a sandbox where eligible operators can test virtual asset products "under close supervision." Cohort 2's VASP track opened less than a month later.

The EO's bigger contribution is the jurisdictional map. It creates a Virtual Asset Council chaired by the CBN, with the SEC and the Nigeria Revenue Service as vice-chairs and the NFIU and the Office of the National Security Adviser as members. It creates no new regulator; the State House says the framework coordinates existing agencies rather than replacing them. A Virtual Asset Office at the CBN serves as the council's operational arm, with a shared supervisory technology platform planned for inter-agency coordination.

The split it formalizes: the CBN oversees payment, settlement, custody and non-security virtual asset services. The SEC keeps digital assets that qualify as securities under the Investments and Securities Act 2025. A fiat-pegged stablecoin used for payments falls on the CBN side of that line; a token sold as an investment falls on the SEC's.

One loose end worth flagging: an August 2025 presidential directive had earlier established a Virtual Asset Regulatory Authority (VARA) comprising the CBN and the tax authority, according to a client alert from law firm Aluko & Oyebode. No document we have seen states how VARA relates to the EO's Virtual Asset Council. The relationship is unclear.

A founder's license map: CBN or SEC?

What follows is TechCurrent analysis, grounded in the documents above rather than any CBN guidance, because no CBN guidance on post-sandbox licensing exists yet.

The CBN sandbox's admission of unlicensed startups is the genuinely new on-ramp here. The SEC's ARIP, which grew from Busha and Quidax in 2024 to a reported 14 firms by mid-August 2026 according to Nairametrics, carries real costs: the SEC's own ARIP checklist lists a non-refundable N2 million processing fee plus evidence of required capital and a fidelity bond, a bar many early-stage teams cannot clear. A supervised test under caps, open to a startup with an MVP and clean beneficial-ownership records, is a materially lower bar to a first regulated foothold.

The overlap risk is equally real. Aluko & Oyebode note that Flutterwave and Paystack, both already CBN payment licensees, face supervisory engagement from both regulators where their activities touch securities. Nigeria now effectively runs two parallel incubation regimes (SEC ARIP and the CBN sandbox) for one overlapping industry. The prize is not small: Chainalysis figures cited by TechCabal put crypto transacted in Nigeria at $92.1 billion between July 2024 and June 2025, the largest market in Africa by transaction volume. It is also a market where currency pressure rewrites business models fast, as Uber's Nigeria exit showed this week.

What to watch when selections land

Whether a participant list appears at all. This is the big one. When Cohort 1 opened in December 2022, more than 1,000 companies reportedly applied, per Techpoint Africa, and the CBN never published a participant list or outcomes, despite its own framework saying cohort lists would be published. TechCabal reported in August 2023 that the sandbox had made "no real progress." A named, public Cohort 2 list would signal that the EO framework changed something; silence would signal it did not.

Timing. The CBN has announced no selection date. "Imminent" is an inference from the closed application window, not a CBN statement.

The caps. Test durations, transaction limits and exposure caps for Cohort 2 are unpublished. They will determine whether sandbox participation is a real market test or a demo.

The exit. No CBN license category for VASPs has been published. What a successful sandbox graduate becomes is, for now, an open question.

The pilot six. Whether cNGN, Flutterwave, Paystack, Juicyway, KoinKoin or KuCoin applied to Cohort 2, or get any fast track from the March supervision pilot, is not stated in any document we have seen.

Five years ago the CBN's answer to crypto was a closed bank account. Its answer now is a supervised test bench with its own portal. The distance between those two positions is the story; the next data point is a list of names, whenever the CBN decides to publish one, if it does.

“The last time the CBN opened a sandbox, more than 1,000 companies reportedly applied and a participant list never appeared. Whether Cohort 2 gets a public list is the first real test of the new framework.”

Reporting by TechCurrent Staff · TechCurrent