The Security and Exchange Commission (SEC) says the need to be better positioned to address identified risks in the cryptocurrency that informed its decision to seek to develop an appropriate regulatory framework and other digital assets space.
The Director General of the SEC, Lamido Yuguda, gave the clarification in Abuja when he appeared before the joint session of the Senate Committee on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime.
Mr Yuguda said the Commission was committed to enhancing financial inclusion in the country through the promotion of financial technology.
FinTech in the financial industry, he said, was to create an enabling regulatory environment and balance between investor protection and technological advancement.
It was the recognition of the importance of the disruption of FinTech in the financial industry and the need to create an enabling regulatory environment to ensure a balance between investor protection and technological advancement that informed the decision by the Commission to warn Nigerians against virtual assets and cryptocurrencies.
“We believe that FinTech would not only bring about efficiency to the capital market, but 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 said.
The SEC boss said to develop an appropriate regulatory framework, regulators need to understand the cryptocurrency asset space to be better positioned to address identified risks.
SEC, he said, will advance efforts towards developing a comprehensive regulatory framework that ensures operators in the cryptocurrency asset space conducted 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 and collaborate with all critical stakeholders, including the Central Bank of Nigeria (CBN), to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market” Mr Yuguda said.
Mr Yuguda said the SEC’s approach to the cryptocurrency issue was consistent with the approaches of several securities regulators around the world as in the United States of America.
He said 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.
Also, in the United Kingdom, the Financial Conduct Authority (FCA) requires firms that carry on specified activities, by way of business, involving a cryptocurrency asset, to be authorized.
In South Africa, he said cryptocurrency assets are viewed as financial products and the Financial Sector Conduct Authority (FSCA) requires persons carrying out associated activities to be regulated.
Again, 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.
The Chairman of the Joint Committee, Uba Sani who said the Committee was on a fact-finding mission in the interest of Nigerians and the nation’s economy, said the Committee would look at enabling laws in line with global best practices.
“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”, Mr Sani said.