The Securities and Exchange Commission (SEC) has said it’s stance on cryptocurrency does not contradict the position of the Central Bank of Nigeria (CBN).
The Central Bank had earlier this week barred banks from engaging in crypto transactions. The regulation in a statement on Monday said it took the action as the digital currency was being used to not only finance terrorism but also as a money laundering instrument. And the action has not gone down well with many Nugerians who felt the apex bank’s action contradicts the position of the SEC, the regulator of Nigeria’s capital market.
However, in a statement Thursday night, the Commission said CBN’s action as a regulator of the banking sector is justified considering that it 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.
The statement reads: “The Securities and Exchange Commission (SEC) has received several comments and inquiries from the public on a perceived policy conflict between the SEC Statement on Digital Assets and their Classification and Treatment of September 11, 2020 and the Central Bank of Nigeria (CBN) Circular of February 5, 2021. 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.
“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.
“Consequently, it has become necessary to provide the following clarifications about the implementation of SEC’s Capital Market FinTech Strategy:
I. 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.”
The capital.market regulator said it will continue to monitor developments in the digital asset space and further “engage all critical stakeholders with a view to creating a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market,” it added.
