LAGOS - Nigerians are increasingly turning to U.S. dollar-pegged digital tokens, or stablecoins, ​to move money ⁠across borders, as households and small businesses seek ‌cheaper and faster alternatives to traditional channels, the IMF said on ​Tuesday.

The Fund said what began as a niche crypto use ​has grown into ​a significant payments route, with Nigeria receiving about $59 billion in crypto inflows between July 2023 ⁠and June 2024 and accounting for roughly 60% of stablecoin inflows in sub-Saharan Africa.

Stablecoins - cryptocurrencies pegged to assets and designed to hold a stable value - have gained global ​traction, ‌backed in part by ⁠support from ⁠U.S. President Donald Trump.

Their price stability, combined with fast transfers ​via smartphones and digital wallets, has ‌driven rapid adoption in Nigeria, the ⁠IMF said.

For users, they offer near-instant cross-border payments and a way to store value outside a volatile naira currency, effectively bridging crypto markets and traditional finance.

They can also undercut conventional remittance channels, where sending $200 to sub-Saharan Africa costs on average about 9% of transaction value, compared with a global average of 6%, said ‌the IMF, citing World Bank data.

However, their rise ⁠poses policy challenges.

Widespread use of ​dollar-linked tokens could weaken monetary policy by reducing demand for the naira, while shifting transactions to digital wallets complicates ​oversight and ‌raises the risk of illicit flows, the ⁠IMF said.

(Reporting by MacDonald ​Dzirutwe. Editing by Chijioke Ohuocha and Mark Potter)