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Friday, February 12, 2021 / 09:10 AM / by SEC Nigeria / Header Image Credit: Adobe
The Securities
and Exchange Commission (SEC) has received several comments and inquiries from
the public on a perceived policy conflict between the SEC Statement on Digital Assets and their
Classification and Treatment of September 11, 2020 and the Central Bank
of Nigeria (CBN) Circular of February 5, 2021. We see no such contradictions or
inconsistencies.
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 SEC made
its statement at the time, 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
mandate of the SEC, as well as financial system stability, a key mandate of the
CBN.
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.
Consequently,
it has become necessary to provide the following clarifications about the
implementation of SEC's Capital Market FinTech Strategy:
The SEC 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.
Related Links and Post on the CBN Action
1. CBN Responds to Reactions on
Regulatory Directive on Cryptocurrencies - Feb 07, 2021
2. Central Banking and the Cryptocurrency
Challenge - Call it like it is - by Tope Fasua, Feb 07, 2021
3. CBN Tightens Noose on Cryptocurrency Market - Proshare, Feb 05, 2021
4. A Thread Explaining What
the CBN Circular Means and Why the CBN issued It - Stears
Business, Feb 05, 2021
5. CBN Circular on CRYPTOCURRENCY:
CBN and SEC Singing Discordant Tunes - By Stephen
Azubuike, Stephen Legal, Feb 05, 2021
6. The Unsettling Dust over
Cryptocurrency Transactions - by James Emejo,
ThisDay, Feb 07, 2021
8. Feb 05, 2021
9. More than 1,000
cryptocurrencies have already failed - here's what will affect successes in
future - by Gavin Brown and Richard Whittle,
The Conversation, Nov 21, 2019
10. Banning Cryptocurrency
will Give Power to Outlaws - Emeka Okoye, Leadership, 3
years ago
11. VIDEO: 2017 CIBN forum
discussing blockchain technology in Nigeria - WebTV, 2017
12. Banking and Bitcoin - Can
Crypto Kill the Banks? - by Ivan on
Tech, Sep 19, 2020
13. Can Bitcoin Kill Central
Banks? - by James MCWHINNEY, Investopedia,
Jun 25, 2019
14. Central Bank Digital
Currency and its impact on the banking system: A need for a new payment system -
by Zeb, Innovation & Digital, BankingHub, Aug 22, 2018
15. Why Central Bank Digital
Currencies will Destroy Bitcoin -
by Nouriel Roubini, The Guardian, Nov 19, 2018
16. (PDF) Fedcoin: A
Central Bank-issued Cryptocurrency - by JP
Konig, Nov 15, 2016
Related Video
The first video is an excerpt from the 2017 CIBN forum discussing blockchain technology in
Nigeria. Mr. Musa Jimoh (the then Deputy
Director, Payments CBN) was giving the position of the banking regulator on
digital currency. CBN's position has since evolved as changes occurred in
adoption, infrastructure, risks & global regulation.
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