Dr. Emomotimi Agama, the Director-General of the Securities and Exchange Commission (SEC), in a recent article on cryptocurrency titled “Stablecoins and National Security: Implications for Nigeria’s Regulatory Landscape,” published in the International Journal of Cryptocurrency Research, pointed out that the use of Stablecoins requires a re-evaluation of their effect on national security.
He observed that “The very features that make stablecoins appealing—ease of use, anonymity, and potential for cross-border transactions—also raise concerns about national security. The lack of transparency and oversight in the stablecoin market creates vulnerabilities,” he added.
Speaking further, he said, “Malicious actors could exploit these vulnerabilities to manipulate markets, attack currencies, launch cyberattacks that disrupt financial systems or erode trust in digital assets.
Furthermore, the potential for stablecoins to be used for illicit financial activities, bypass monetary controls, and circumvent Anti-Money Laundering (AML) regulations poses a significant threat.”
He emphasised that stablecoins pose various challenges for public policy, oversight, and regulation, including legal certainty, governance, AML/CFT compliance, operational resilience (including cybersecurity), consumer/investor protection, data security, and tax compliance.
“The world of cryptocurrency is rapidly evolving, and governments are struggling to keep pace. As stablecoins gain traction, regulators are working to establish frameworks that manage risks and protect consumers.
According to Syed (2023) Central banks are wrestling with how to regulate stablecoins, a new digital currency gaining traction.
The challenge lies in balancing innovation with financial stability. Stablecoins, pegged to traditional currencies, could disrupt central banks’ control over money supply.
Regulations aim to ensure stablecoins don’t undermine monetary policy or enable illegal activities.”
Dr. Agama noted that despite Nigeria’s prominent position as a global leader in Bitcoin trading, it surprisingly does not rank among the top 10 countries in terms of stablecoin acquisition.
He observed that although the United States and the EU maintain their presence, emerging economies such as Turkey, Thailand, and Brazil are taking the lead in stablecoin acquisition relative to their national GDP, with Turkey particularly standing out.
“The global interest signifies a widespread and increasing dependence on USDT across diverse geographical regions. Interestingly, countries grappling with currency instability and devaluation, such as Turkey and Georgia, are prominently engaged in USDT purchases.”
Providing insight into the global regulatory landscape, the SEC DG noted that the European Union’s Markets in Crypto Assets (MiCA) regulation establishes a framework for how member states approach stablecoins.
Examining Japan and Singapore, he noted that Asian economies have developed bespoke regulatory frameworks tailored to stablecoins.
“The regulatory landscape for stablecoins in Canada is still evolving. Both deposit-backed and algorithmic stablecoins are currently legal, but there is no formal distinction between the two yet. El Salvador stands out as the first country to adopt bitcoin as legal tender.
It also allows both deposit-backed and algorithmic stablecoins, and even plans to launch its own national stablecoin pegged to the US dollar.”
The article emphasised that stablecoins have become a critical element of the cryptocurrency ecosystem, offering benefits such as value stability, efficient cross-border transactions, and enhanced access to Decentralised Finance (DeFi) and everyday payment systems.