How Nigeria’s Central Bank plans to monitor your stablecoins

In its Payments System Vision 2028 (PSV 2028), unveiled on June 1, the Central Bank of Nigeria (CBN) said it intends to run observer nodes on blockchain networks that operate approved stablecoins, enabling the regulator to see stablecoin transactions in real time. 

A blockchain network is a shared ledger: instead of one company keeping the only copy of transaction records, many computers maintain copies and keep them in sync. An observer node is a computer connected to the network that keeps a copy of the blockchain and monitors activity on it. It does not validate or submit transactions to the network; its job is to observe.

Running observer nodes on blockchains would give the CBN a direct view of how those tokens are created, moved, or destroyed, rather than making it depend entirely on reports prepared by the companies issuing them. It marks the regulator’s attempt to bring stablecoins into Nigeria’s regulated payments system without giving up visibility over how money moves across it.

Stablecoins are digital currencies built on blockchain technology and designed to maintain a 1:1 peg to real-world currencies, such as the US dollar or naira. If a stablecoin is backed by the naira one-to-one, its issuer—usually private companies—must hold an equivalent amount or more in reserves with banks and other financial institutions, and keep those reserves available when customers buy or redeem the stablecoin.

Nigerians use stablecoins for remittances and as a hedge against naira volatility, the CBN said in its PSV 2028 document. Much of that activity is informal or peer-to-peer (P2P), as further noted. The central bank now wants to regulate the stablecoins it approves, require them to hold reserves, and build infrastructure that lets it see their activity directly.

Nigeria is not an isolated case. On June 30, 2026, Kenya’s Capital Markets Authority (CMA) issued a tender for virtual asset blockchain analytics providers, asking bidders to provide KES 900,000 ($7,000) in tender security, signalling the regulator’s readiness to work with managed services providers to gain greater oversight into how virtual assets operate on blockchains.

Regulators want greater visibility into how digital assets—especially stablecoins and their role in payments—move on blockchains as they seek to manage risks to monetary sovereignty. However, running observer nodes could increase compliance costs for stablecoin issuers, who may need to hire managed services providers to meet the CBN’s proposed technical requirements.

Stablecoins are no longer fringe experiments

Between July 2024 and June 2025, digital currencies, including stablecoins, accounted for an estimated $205 billion in transaction flows in Sub-Saharan Africa, according to blockchain analytics firm Chainalysis. The company said remittances, retail payments, and business-to-business (B2B) cross-border transactions using digital currencies have become increasingly common, especially in countries such as Nigeria, Kenya, South Africa, and Ethiopia.

Another report by Hashed Emergent, an India-based venture capital firm that invests in early-stage Web3 firms including African startups, noted that Nigeria had the highest 24-hour stablecoin P2P transfer volume on centralised exchanges in Sub-Saharan Africa, reaching $48.2 million in 2025, underscoring how deeply embedded those channels have become in moving money in the country and cementing the CBN’s case for tighter oversight of the sector. 

The CBN is also building a regulatory framework around stablecoins. It has opened a second cohort of its regulatory sandbox, which now includes stablecoin issuers and other virtual asset service providers. Under its PSV 2028, the regulator plans to licence fiat-backed stablecoins and require a minimum percentage of reserves backing foreign-currency stablecoins, such as the US dollar, to be domiciled in Nigeria with approved custodians (banks). 

For the regulator, the next question is visibility. The key benefit of running observer nodes is independence: the central bank can read the stablecoin-issued blockchain network to obtain high-level information about the digital currency’s supply and circulation, without relying on the issuer to tell it what happened. 

Blockchains, such as Bitcoin and Ethereum, are already public on permissionless networks, allowing anyone to run these nodes without needing approval from a central authority. The attraction is that the regulator would no longer have to take an issuer’s word for what happened on the chain.

“The practical value is not like the observer node [will] magically reveal new categories of truth,” Derek Degbe, a senior blockchain analytics engineer, told TechCabal in an interview. “The value is that they give the CBN an independent, more continuous, and evidence-based view of the on-chain side of the stablecoin system.”

Licenced stablecoin issuers would be required to build features into their smart contracts—the code on which the stablecoin is built—that link reserve information to the blockchain and provide the CBN with access to relevant data. 

Observer nodes would allow the central bank to continuously monitor the blockchains on which approved stablecoins operate and see transactions in real time, rather than relying solely on reports from issuers, banks, independent auditors attesting to stablecoin reserves, and other regulated institutions. 

While it is technically possible to run observer nodes on permissionless blockchains, the harder part is deciding exactly what the CBN will monitor, how many blockchains it will support, and what happens to everything the blockchain cannot tell it.

What CBN actually wants to build

Beyond running nodes on blockchains, Nigeria’s central bank has also proposed licencing fiat-backed stablecoins and requiring issuers to keep reserves fully segregated, audited, and attested to daily. 

The CBN is evaluating a “RegTech Node” that would give it direct, real-time visibility into approved stablecoins. The node would be read-only, allowing the bank to watch the blockchain without changing transactions. 

For this to work, the CBN wants each licenced issuer to build four things into its stablecoin.

First, smart contract transparency hooks, which would record every mint, burn, and redemption, so the CBN can see when tokens are created, destroyed, or redeemed. 

Second, regulator access addresses, allowing the CBN to read relevant data without interfering with transactions. 

Third, a link to reserves. Approved custodians would publish cryptographically signed proofs of reserves to the blockchain, allowing the CBN to compare reserves with tokens in circulation. 

Fourth, source code disclosure and approved smart contracts that cannot be changed or upgraded without CBN re-certification. 

The CBN wants to see how many tokens exist, where they move, whether reserves match the supply, and which code is creating those tokens.

“If the stablecoin runs on a public blockchain using a standard token contract, then CBN could run its own full nodes, doing some indexed node infrastructure, and monitor the issuer’s contract addresses, their treasury wallets, how they are maintaining minting or burning events, admin actions, and even the bridge endpoints,” Degbe said. “So in that model, no special permission from the [blockchain] is required.”

The regulator is simply reading the public ledger in a more structured way, Degbe added. The issuer requirements make monitoring useful: the CBN needs to know which contract is official, which wallets belong to the issuer, how minting works, where reserves are held, and when the contract changes.

Adedayo Akinpelu, chief executive officer of Blockops, a Nigerian blockchain infrastructure company, made a similar point.

“The thing about the blockchain is that those data already exist everywhere,” he said. “It’s already open for you to see—for anyone to see. As a policymaker, you cannot just rely on third-party information; you want data that you are getting yourself.”

The blockchain gives CBN a lot—but not everything

An observer node would give the CBN a continuous view of the ledger. It could see new tokens being minted, tokens being burned, supply on a blockchain, and movements between wallets. It could also monitor issuer wallets, bridges, and other known infrastructure. 

Degbe said this could help the CBN spot “a sudden supply expansion,” unusually concentrated wallet activity, or rapid redemption waves without waiting for an issuer’s report. The node would also allow the CBN to compare two records: what the issuer says happened and what the blockchain shows happened.

An “indexer”, which collects blockchain data and puts it into a searchable database, could also bring information from different networks into one place, Akinpelu said. 

Yet, despite observer nodes, the blockchain cannot tell the CBN who owns a wallet.

“A node tells you the wallet that sent the funds, but it doesn’t tell you the person that’s behind it; identity is the part that monitoring and supervision actually runs on,” Gracious Igwe, a Nigerian blockchain open-source intelligence (OSINT) analyst, told TechCabal. 

If a regulated virtual asset exchange has identified a wallet owner through know-your-customer (KYC) or know-your-business (KYB) checks, the CBN could connect that identity to blockchain activity. But that only works when users hold their assets in custodial wallets managed by regulated virtual asset service providers. Non-custodial wallets, which often do not require KYC, can be much harder to link to a person.

The same limit applies to reserves.

A blockchain can show the CBN that 100 million stablecoin tokens exist. But it cannot, by itself, prove that the issuer has ₦100 million in an eligible bank account, that the money is separate from the issuer’s other funds, or that holders can redeem it.

“The most critical boundary is that on-chain tooling can actually show issuance, redemption, or circulation,” Degbe said. “But off-chain facts like reserve balances, custody structure, and legal redemption and enforceability will still have to come from reporting or attestation and even auditing.”

This is why the CBN’s node proposal will have to work alongside mandated reserve requirements, daily attestations, and monthly audit reports for issuers.

The multi-chain problem comes next

Here’s what Nigeria’s central bank is pitching stablecoin issuers: choose a blockchain, run a node, and give the regulator a way to track the stablecoin. 

However, that plan conflicts with how stablecoins are supposed to work: they do not remain on a single blockchain network. Many stablecoin issuers, including Circle, Tether, and Nigeria’s WrappedCBDC, typically list their tokens on multiple blockchains to reach more users and grow adoption. A stablecoin business thrives on volume: the more transactions take place, the more micro-revenue issuers can earn from that activity.

According to Igwe, observer nodes work well on public networks such as Ethereum, Tron, and BNB Chain. Others, such as Solana, can require much heavier infrastructure, especially when the regulator needs historical data. 

The CBN likely anticipates this multi-chain problem. In PSV 2028, the regulator said that where stablecoins operate across multiple public blockchains, its observer node “may connect through a regulated intermediary network” that aggregates mint and burn data from external chains and gives the central bank a single visibility layer. 

But that creates another problem.

“If you have open-ended blockchains that you’re trying to control or monitor, that becomes harder—unless the monitoring from the side of CBN is going to be on a lot of the major networks,” Degbe said. “Every additional blockchain can introduce a separate operational stack, with different node software, data formats, and assumptions.”

Degbe said the CBN could adopt a restrictive model in which it approves only a defined list of blockchains for issuers, requiring them to seek approval before adding another. 

To build the infrastructure needed to monitor those blockchains, the regulator can either run the nodes itself or rely on technology providers—managed services firms—that already offer access to blockchain data. 

“If the goal is mostly supervision and monitoring, the fastest route [could] be to buy capability and not just build infrastructure,” Igwe said, pointing to blockchain analytics and commercial remote procedure call (RPC) providers. 

Yet, it is unclear whether the plan is a settled policy. PSV 2028 lists observer nodes as a deliverable, while the CBN is still “evaluating” the technology and “assessing” the RegTech Node architecture. 

The regulator still has to decide which blockchains qualify—if it opts for a restrictive model—whether it will build or outsource the infrastructure, what issuers must disclose, how bridges and wrapped tokens will be treated, who pays, and what happens when an issuer changes its smart contract. 

The technology itself is not the biggest obstacle; the harder job for the CBN is turning the idea into a system it can actually run and enforce. 

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