SEC Launches Fintech Division to Understudy Crypto Investments
Nigeria’s securities regulator has set up a fintech division to study crypto investments and products in order to come up with regulations, the head of the country’s Securities and Exchange Commission (SEC) said on Thursday.
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain,” SEC Director-General Lamido Yuguda told Reuters in a virtual interview in Abuja.
He did not provide a time frame for issuing regulations but said the SEC will step in with regulations once crypto is allowed within the Nigerian banking system. The SEC has sought to regulate crypto on the grounds that they qualify as securities transactions.
Nigeria is one of the biggest markets for crypto trading, but the central bank banned lenders in February from transacting or facilitating deals in cryptocurrencies.
The use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, driven by payments from small businesses and a weakening naira currency, which makes it difficult to get the U.S. dollars needed to import goods or services.
Yuguda said the commission has been in talks with the central bank, part of which led to the launch of the country’s digital currency, e-naira.
The commission is seeking to work with fintech firms to boost the marketing of domestic securities to prevent capital flight. The central bank this month blocked the accounts of six firms for allegedly sourcing funds from illegal foreign exchange operators to buy foreign securities and cryptocurrencies.
He said the SEC is looking to boost savings through investment schemes, which currently have over 4 trillion naira ($9.7 billion) under management split between public and private fund managers.
Recall, in recognition of the fact that digital assets may have the full characteristics of investments as defined in the Investments and Securities Act 2007, it asserts that trading in such assets falls under SEC’s regulatory purview, except proven otherwise.
However, 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, SEC moved to engage 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.
SEC sees crypto assets as a digital representation of value that can be digitally traded and functions as a medium of exchange; and/or a unit of account; and/or a store of value but does not have legal tender status in any jurisdiction.
It added that a crypto asset is neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the crypto asset and distinguished from Fiat currency and e-money.
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Yuguda said the regulator has asked private managers to put in place custody arrangements to protect investors.
SEC Launches Fintech Division to Understudy Crypto Investments
