SEC responds to CBN’s ban on cryptocurrency transactions in Nigeria

Contrary to the perceived policy conflict from different quarters, the Securities and Exchange Commission of Nigeria (SEC) has issued a statement, citing that there are no contradictions or inconsistencies between the commission and CBN over the ban on cryptocurrencies.

It said:

“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 commission further reveals that the statement is not to stifle innovation but to establish standard ethical practices for upholding a fair and efficient securities market.

The commission also suspended admittance of all persons affected by CBN’s circular into its Regulatory Incubation Framework for Fintech firms. The disclosure was made on Thursday in Lagos, Nigeria. It said that the assessment of all persons and products affected by the CBN Circular of February 5, 2021, would be on hold until such persons can operate bank accounts within the country’s banking system.

It said:

“For admittance into the SEC Regulatory Incubation Framework, assessment of all persons (and products) affected by the CBN Circular of February 5, is put on hold until such persons can operate bank accounts within the Nigerian banking system.”

However, the commission reinstated that the planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms intending to introduce innovative models for offering capital market products and services would continue.

SEC resolves to promote economic development

The commission further assured the public that it would continue to monitor developments in the digital asset space to promote economic growth.

“The commission will continue to monitor developments in the digital asset space and further engage all critical stakeholders to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital.”

The SEC made its statement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported inflows. It has also engaged the CBN and would continue to work with it to understand the identified risks.

“In light of these facts, we have engaged with the CBN and agreed to work together to analyze and better understand the identified risks to ensure that appropriate and adequate mitigants are in place, should such securities be allowed in the future,” it said.

Meanwhile, Nairametrics reported that CBN insisted that its recent restriction was not new but only a reminder of the earlier circular of January 2017.

“As regards our recent policy pronouncement, it is important to clarify that the CBN circular of February 5, 2021, did not place any new restrictions on cryptocurrencies. All banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade or transact in cryptocurrencies.”

The apex bank also stated that the prohibition of cryptocurrencies was not exclusive to Nigeria alone; there are also certain restrictions on financial institutions facilitating crypto transactions in several other countries.