Cryptocurrency ban: SEC engages CBN to clarify contradictions

The reactions trailing the ban of cryptocurrency by the Central Bank of Nigeria might linger for a while as the Security and Exchange Commission said it had engaged the apex bank to analyse further and better understand the identified risks.

SEC disclosed this in a statement on Thursday.

It said, “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.”

The commission noted that the engagement came on the backdrop of several comments and inquiries from the public on a perceived policy conflict between its statement on digital assets and their classification and treatment of September 11, 2020, and the CBN circular of February 5, 2021.

“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 commission noted.

SEC said it made the statement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported flows, in which the CBN identified certain risks, and if allowed to persist would threaten investor protection as well as financial system stability.

It added, “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.”