Security and Exchange Commission (SEC) Nigeria has stated it has agreed to work with the Central Bank of Nigeria to analyze and better understand the risks involved in cryptocurrency. In a statement published by the Capital Market regulator, the agreement will also see to finding and putting in place appropriate and adequate mitigations against the identified risks.
In September, 2020, the SEC published a statement saying all cryptocurencies are considered securities unless proven otherwise and the burden of proof falls on the initiator or promoter. The recent action by the CBN to prohibiting financial institutions the trading in cryptocurrency has prompted the capital market regulator to published this statement.
Yesterday the 11th of February, 2021, the Nigerian Senator invited the Central Bank Governor to speak on the Bank’s action. The outcome of the meeting revealed a significant support for cryptocurrency in the country though one lawmaker, Senator Sani Musa claimed cryptocurrency is the reason for the weakening naira. He said cryptocurrency has made the naira valueless and useless.
In the SEC’s recent statement, it said “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.”
Continuing on and defining the fate of crypto businesses, the SEC said:
“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.”
It revealed it will continue to monitor the developments going on in the cryptocurrency space and will work with stakeholders to create a regulatory structure that promotes growth, transparency and innovation.