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SEC Suspends Clearance Of Persons, Products Affected By CBN Ban On Crypto Currencies

Says No Policy Conflict With Apex Bank

The Securities and Exchange Commission (SEC), on Thursday night said there are no perceived policy conflicts, contradictions or inconsistencies between its statement on Digital Assets, their Classification and Treatment of September 11, 2020, and the Central Bank of Nigeria (CBN) circular of February 5, 2021.

Rather, the commission announced the suspension of the assessment of all persons (and products) for the purpose of admittance into the SEC Regulatory Incubation Framework, but affected by the CBN circular of February 5, 2021, until such persons are able to operate bank accounts within the Nigeria.

It however said the planned implementation of the its “Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.”

The commission further 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 is not known whether the SEC statement is in any way related to the summoning of its Director-General, Lamido Yuguda, earlier that day to appear before the Senate Committees on Banking, Insurance, and Other Financial Institutions; ICT and Cybercrime; and Capital Market, along with the Governor of Central Bank of Nigeria (CBN), Godwin Emefiele.

They are “to brief the committees on the opportunities and threats of the Cryptocurrency on the nation’s economy and security and to report back their findings within two weeks. (READ MORE)”

According to the SEC’s statement, 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 asserted that trading in such assets falls under its regulatory purview, except proven otherwise.

The primary objective of its September 11, 2020 statement, the commission stressed, “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 statement was made at the time, the commission explained further, “to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows.

“Subsequently, in its capacity as the regulator of the banking system, the CBN identified certain risks, which if allowed to persist, will threaten investor protection, a key mandateof the SEC, as well as financial system stability, a key mandate of the CBN,” the statement added.

In light of these facts, the SEC said it has “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.”

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