…SEC to Engage Critical Stakeholders on Regulatory Structure

Godwin Emefiele

Ndubuisi Francis in Abuja

As the recent directive by the Central Bank of Nigeria (CBN) asking commercial banks to stop facilitating cryptocurrency transactions in Nigeria continues to generate controversy, the Securities and Exchange Commission (SEC) has stated that it will continue to monitor developments in the digital asset space and further engage all critical stakeholders.

This, it said, was with a view to creating a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market.

SEC’s reaction is coming on the heels of yesterday’s decision by the Senate to summon the CBN Governor, Mr. Godwin Emefiele and the Director General of SEC, Mr. Lamido Yuguda, following the controversy trailing CBN’s directive.

In a statement issued last night, SEC said it had received several comments and inquiries from the public on a perceived policy conflict between its September 11, 2020 statement on Digital Assets and their Classification and Treatment and the CBN circular of February 5, 2021.

The Commission said: “We see no such contradictions or inconsistencies.

“In recognition of the fact that digital assets may have the full characteristics of investments as defined in the Investments and Securities Act 2007, the SEC statement asserts that trading in such assets falls under SEC’s regulatory purview, except proven otherwise.

“The primary objective of the statement was not to hinder or stifle innovation, but to establish standards of ethical practices that ultimately make for a fair and efficient securities market.

“The SEC made its statement at the time, to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows. Subsequently, in its capacity as the regulator of the banking system, the CBN identified certain risks, which if allowed to persist, will threaten investor protection, a key mandate of the SEC, as well as financial system stability, a key mandate of the CBN.

“In light of these facts, we have engaged with the CBN and agreed to work together to further analyse, and better understand the identified risks to ensure that appropriate and adequate mitigants are put in place, should such securities be allowed in the future.”

According to the Commission, “consequently, it has become necessary to provide the following clarifications about the implementation of SEC’s Capital Market FinTech Strategy:

“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.

“The planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.”

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