SEC Tasks CBN, Others on Understanding Crypto Space for Proper Guidance

The need for regulators in the financial industry in the country, including the Central Bank of Nigeria (CBN), to understand the crypto asset space for proper regulations has been stressed by the Securities and Exchange Commission (SEC).

According to the Director-General of the SEC, Mr Lamido Yuguda, if the regulators can do this, they would be better positioned to address identified risks.

Recently, the CBN ordered banks in the country to close down all accounts of individuals and companies trading cryptocurrencies.

This sparked reactions from many quarters, including the National Assembly. The Senate had to summon the Governor of the apex bank, Mr Godwin Emefiele, to explain the reason for his action.

While appearing before the joint session of the Senate Committee on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime in Abuja last Tuesday, Mr Emefiele noted that the action was taken to protect Nigerians as trading in crypto was risky.

But the DG of SEC crypto-assets can be regulated for the benefits of the citizens, noting that his agency was committed to enhancing financial inclusion in the country through technology.

According to him, SEC recognises the disruption of fintech in the financial industry and aims to create an enabling regulatory environment that would ensure a balance between investor protection and technological advancement.

“We believe that fintech would not only bring about efficiency to the capital market but would also serve as a veritable tool for advancing Nigeria’s financial inclusion agenda.

“However, there is a need to develop an appropriate regulatory framework to ensure the safety of innovation to investors and preserve market integrity,” he submitted.

He said the SEC will advance efforts towards developing a comprehensive regulatory framework that ensures that operators in the crypto asset space conduct their activities in a manner that protects investors and maintains financial system stability.

“The SEC will continue to monitor developments in the digital asset space and further engage/collaborate with all critical stakeholders, including the CBN, to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market,” he added.

According to Mr Yuguda, the SEC’s approach is consistent with the approaches of several securities regulators around the world as in the United States of America, the US SEC requires platforms that offer trading in digital asset securities and operate as exchanges to register or seek to be exempted from registration.

“In the United Kingdom, the Financial Conduct Authority (FCA) requires firms that carry on specified activities, by way of business, involving a crypto asset, to be authorised. Crypto assets are viewed as financial products in South Africa and the Financial Sector Conduct Authority (FSCA) requires persons carrying out associated activities to be regulated.

“In Malaysia, operators of digital asset platforms are required to be approved by the Securities Commission (SC) as recognized market operators. Several other securities regulators have taken similar positions,” he informed the lawmakers.

Speaking earlier, the Chairman of the Joint Committee, Mr Uba Sani, said the team was on a fact-finding mission in the interest of Nigerians and the nation’s economy.

“We shall look at the position of the CBN who have said cryptocurrencies are very volatile and support insurgency. The Senate will always support innovation and the effective use of ICT for economic empowerment.

“We are aware of the damage it has done and we are poised to protecting our economy and ensure that our people benefit where necessary,” he said.