SEC, CBN, others to develop regulatory structure for cryptos

The Securities and Exchange Commission said on Tuesday that it would collaborate with the Central Bank of Nigeria and other critical stakeholders to create a regulatory structure for crypto assets and other digital assets. 

The Director-General, SEC, Mr Lamido Yuguda, said this at the joint session of the Senate Committee on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime in Abuja, on Tuesday.

The CBN had said earlier in the month that it prohibited regulated institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges. It, therefore, ordered banks and other financial institutions to close all cryptocurrency accounts.

Yuguda said the commission was committed to enhancing financial inclusion in the country through technology and recognised the disruption of fintech in the financial industry, according to a SEC statement.

He said the commission would 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.

He said, “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.”

Yuguda said to develop an appropriate regulatory framework, regulators needed to understand the crypto asset space to be better positioned to address identified risks. 

“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 said. 

According to Yuguda, the SEC’s approach is consistent with the approaches of several securities regulators around the world.

He said 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 requires firms that carry on specified activities, by way of business, involving a crypto asset, to be authorised,” he said.

According to him, crypto assets are viewed as financial products in South Africa and the Financial Sector Conduct Authority 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 as recognised market operators. Several other securities regulators have taken similar positions,” Yuguda added.

The Chairman of the Joint Committee, Senator Uba Sani, was quoted as saying that the committee would look at enabling laws in line with global best practices. 

He said, “We shall look at the position of the CBN who have said cryptocurrencies are very volatile and supports 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 are poised to protect our economy and ensure that our people benefit where necessary.”