SEC Will Ensure Investor Protection-Fintech Balance, Yuguda Assures

Nigeria’s Securities and Exchange Commission, on Tuesday, restated its commitment to enhancing financial inclusion in the country through technology, even as it recognizes the disruptive capacity of FinTech in the financial industry.

That is why, according to its Director General, Lamido Yuguda, the SEC aims to create an enabling regulatory environment that would ensure a balance between investor protection and technological advancement.

Addressing a joint session of the Senate committees on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime in Abuja, he expressed belief that FinTech would bring about efficiency to the capital market, while also serving as a veritable tool for advancing Nigeria’s Financial Inclusion agenda.

He stressed that there was no policy contradiction between the CBN directive and the pronouncements made by the commission on the subject of cryptocurrencies in Nigeria.

The commission, he explained, made its pronouncement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported flaws.

Prior to the CBN directive, he continued, the SEC had, in 2017, cautioned the public on the risks involved in investing in digital and cryptocurrency, adding that the CBN, Nigeria Deposit Insurance Corporation (NDIC) and the SEC between 2018 and 2020 had also issued warnings on the lack of protection in investments in cryptocurrency.

Yuguda further disclosed that following the CBN directive, the SEC had put on hold the admittance of all persons affected by the CBN circular into its proposed regulatory incubatory framework in order to ensure that only operators that are in full compliance with extant laws and regulations are admitted into the framework for regulating digital assets.

“However, there is need to develop an appropriate regulatory framework to ensure the safety of innovation to investors and preserve market integrity,” which he stressed, will require that regulators understand the crypto asset space and be better positioned to address identified risks.

He pledged the commission’s resolve to advance efforts towards developing the needed comprehensive regulatory framework that would ensures operators in the crypto asset space conduct their activities, focusing on investor protection and maintaining financial system stability.

“The SEC will continue to monitor developments in the digital asset space and further engage/collaborate with all critical stakeholders, including the CBN, to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market” he added.

According to Yuguda, the SEC’s approach is consistent with those of several securities regulators around the world like the US SEC whichrequires platforms for trading in digital asset securities and operating as exchanges to register or seek exemption from such.

“In the United Kingdom, the Financial Conduct Authority (FCA) requires firms that carry on specified activities, by way of business, involving a crypto asset, to be authorized. Crypto assets are viewed as financial products in South Africa and the Financial Sector Conduct Authority (FSCA) requires persons carrying out associated activities to be regulated.

“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,” he stressed.

Speaking earlier, Chairman of the Joint Committee, Senator Uba Sani said it is on a fact-finding mission in the interest of Nigerians and the nation’s economy, assuring that members would look at enabling laws vis-à-vis 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,” he stressed.

Photo caption: Chairman, Independent Corrupt Practices Commission (ICPC), Prof. Bolaji Owasanoye; Executive Commissioner, Legal and Enforcement, SEC, Reginald Karawusa, Director-General, SEC, Lamido Yuguda; and CBN Governor, Godwin Emefiele; during the joint session of the Senate Committee on Banking, Insurance and other Financial Institutions, Capital Market and ICT and Cyber Crime on the ban on Cryptocurrency in Nigeria at the National Assembly, on Wednesday, February 23, 2021.