Ghana: BoG Moves to Regulate Cedi-Backed Stablecoins

The Bank of Ghana (BoG) is developing a dedicated regulatory framework for cedi-backed stablecoins as it seeks to harness blockchain-based payments while protecting the country’s monetary and financial stability.

Under the emerging framework, issuers of privately backed stablecoins linked to the Ghana cedi would be required to maintain reserves equivalent to the value of tokens in circulation with regulated financial institutions.

The arrangement could create a new layer for peer-to-peer payments, programmable transactions and atomic settlement, while allowing stablecoins to support emerging applications involving tokenised financial and physical assets.

Stablecoin issuers to maintain full reserve backing

The proposed framework is expected to require cedi-backed stablecoins to maintain one-to-one backing, with partner banks holding the underlying fiat reserves.

The structure would draw similarities with Ghana’s mobile-money architecture, where electronic balances held by customers are backed by corresponding funds maintained with partner financial institutions.

BoG is also expected to define which financial instruments can qualify as reserve assets. While some reserves could potentially be invested in instruments such as Treasury bills, maintaining sufficient cash would remain important to ensure issuers can meet redemption requests.

The central bank is considering frequent reserve attestations, potentially on a monthly basis, alongside independent audits. The final frequency and requirements are expected to be established under the regulatory framework.

The measures are designed to provide assurance that an issuer promising one cedi of underlying value for every one cedi of stablecoins in circulation actually holds the corresponding reserves and has sufficient liquidity to honour redemptions.

BoG sees stablecoins as payment and innovation tools

BoG views stablecoins as potential enablers of innovation rather than replacements for the Ghana cedi or existing central-bank and commercial-bank money.

The technology could support on-chain and peer-to-peer payments, programmable transactions and atomic settlement, while creating new opportunities for financial products built around tokenised assets.

Programmable stablecoins can execute transactions automatically when predetermined conditions are met, potentially reducing the need for intermediaries in certain payment arrangements.

Atomic settlement could also improve transaction efficiency by allowing an asset and its corresponding payment to change hands simultaneously. If one side of the transaction fails, the other does not proceed.

These capabilities could become increasingly relevant as tokenisation expands. For example, a physical asset such as gold could be represented through smaller digital units, allowing investors to gain exposure to a fraction of an asset rather than having to acquire the entire underlying asset.

Stablecoins could reshape cross-border payments

BoG also recognises the potential for blockchain-based stablecoins to improve the speed and cost of cross-border transfers.

Traditional international bank payments can involve correspondent banks and several intermediaries, with fees potentially accumulating throughout the transaction chain.

Direct blockchain-based transfers could reduce some of these intermediary steps, potentially shortening settlement times and lowering costs for cross-border payments and remittances.

However, BoG intends to ensure that these efficiencies do not undermine Ghana’s existing foreign-exchange and capital-flow controls.

BoG moves to prevent dollar-backed currency substitution

The opening for cedi-backed stablecoins will be accompanied by tighter controls on foreign-currency-backed tokens as the central bank seeks to prevent digital assets from creating a parallel dollar-based payment system within Ghana.

BoG is particularly concerned about widespread use of dollar-backed stablecoins such as USDT for everyday domestic transactions.

At scale, the central bank believes such usage could contribute to currency substitution, with households and businesses increasingly holding and transacting in digital dollars rather than the cedi.

Under the emerging approach, foreign-currency-backed stablecoins permitted to operate in Ghana would not be allowed to become an alternative currency for domestic commerce. Goods and services would not be permitted to be priced or settled in such tokens, consistent with existing restrictions on the use of foreign currency in Ghana’s domestic market.

Stablecoin adoption could affect bank deposits

The regulatory concerns extend beyond the currency market to financial intermediation.

If households and businesses increasingly hold funds in stablecoin wallets instead of traditional bank deposits, some resources that would normally remain within the banking system could move outside conventional deposit channels.

This could affect the pool of deposits available to banks for lending and, consequently, the role of banks in financial intermediation.

BoG is also assessing the potential for stablecoins to accelerate capital flight during periods of financial stress. Cross-border digital assets can move value more quickly than traditional banking transfers, potentially allowing transactions that previously took days to be completed within hours.

The central bank has pointed to concerns raised in international financial literature, including by the International Monetary Fund and Bank for International Settlements, around currency substitution and capital flight if stablecoins achieve widespread adoption.

Foreign stablecoin issuers to face local requirements

BoG intends to align the treatment of foreign-currency-backed stablecoins as closely as possible with Ghana’s existing foreign-exchange and capital-flow regulations.

Using a stablecoin to transfer funds across borders would not exempt individuals or businesses from foreign-exchange requirements that would apply if the same transaction were processed through the traditional banking system.

Foreign stablecoin issuers seeking to operate in Ghana are also expected to fall under the country’s regulatory regime.

Relevant foreign issuers could be required to register locally and comply with disclosure requirements, while cooperating with Ghanaian authorities where transactions involving their tokens require investigation.

Reserve transparency is expected to form an important part of the framework, including disclosure of where backing assets are held, which banks or financial institutions act as custodians and the nature and liquidity of those assets.

Independent verification could further strengthen confidence that the promised one-to-one relationship between stablecoins and reserve assets is being maintained.

Cedi remains the core settlement asset

BoG’s proposed framework draws a clear distinction between privately issued stablecoins and the eCedi.

The eCedi represents sovereign central-bank money — the Ghana cedi in digital form — while privately issued stablecoins represent digital money whose value depends on the assets backing the tokens.

Central-bank and commercial-bank money are therefore expected to remain the core anchors of Ghana’s monetary and settlement system.

The objective is to allow consumers and businesses to benefit from the payment and settlement capabilities of stablecoins without weakening the country’s existing monetary, foreign-exchange and financial regulatory frameworks.

The cedi, including the eCedi where appropriate, would remain the primary settlement asset, while privately issued stablecoins would operate mainly as complementary tools at the customer, transaction and financial-innovation layers.