Stakeholders Call for Clarity in Regulation and Standardization of Nigeria's Digital Asset Market


Monday, September 28, 2020 / 06:35AM/Nifemi Taiyese for Proshare WebTV/ Header Image Credit: CoinNewsExtra

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Stakeholders at the CoinNewsExtra 2020 forum agreed that there is a need for clarity in the regulation and standardization of the Digital Asset Market in Nigeria. Looking at the subject of "Interpretation of Nigeria's SEC Regulation (Statement on Digital Assets and their Classification and Treatment) of Cryptocurrency in Nigeria" which brought together experts in the cryptocurrency marketplace, it was an opportunity to assess the changing face of the Nigerian crypto market.

Mr. Paul Ezeafulukwe the President of Stakeholders in the Blockchain Association of Nigeria in his remarks said many people have fallen victim to scams in the sector, and it was clear that there have been abuses in the cryptocurrency space which informed the need for regulations.

He called for stakeholders in the cryptocurrency ecosystem to have regular interfacing with the Securities and Exchange Commission.

"There are some individuals who do not understand how cryptocurrency works which are why SEC Nigeria released the policy statement, that explains the offerings and also provides room for recommendations," he said.

Ezeafulukwe speaking further said in all fairness, a policy statement such as the one released by the Securities and Exchange Commission (SEC) cannot be a blanket statement, it needs to be narrowed down for the sake of the general public. Such a statement will only cause friction between industry players and agencies.

He added, "To come up with recommendations, the players in the Nigerian sector need to look at what other countries who are vast in the field are doing and adapt it to suit our clime".

The President of the SBAN said it was important to examine the tax implications of transactions for cryptocurrencies, and how tax can be imposed on capital gains.

On his part, Mr. Chuta Chimezie the Founder of Blockchain Nigeria asserted that policies, regulations and standardization are part of the process for mass adoptions. He highlighted that those in the crypto space are risk-takers, hence the need to utilize blockchain technology for which it is designed for.

According to him policymaking and regulations are key things that need to be put in place in the cryptocurrency ecosystem in Nigeria. Chimezie also noted that the publication by the Securities and Exchange Commission was very clear as to who and what can be regulated. He stated that the digital assets offerings must be registered and subject to regulatory compliance.

"There has to be a level playing ground for everyone in the sector, hence the regulation is purely targeted at the service providers and how the stakeholders in that space interact," Chimezie said.

"There is always a way to bypass laws, however, it remains important that the ground rules are set by SEC. The baseline rules will help to caution the influx of foreigners and will also allow foreign investors to receive a go-ahead from the SEC when entering the Nigerian Business Clime for Crypto".

According to him, the statement released by SEC  Nigeria now indicates that it is legal to talk about digital assets as a subject matter in the public domain without being subject to harassment.

The Senior Partner Financial Forensics/ Virtual Assets Regulatory Advisory, Mr. Adedeji Owonibi, in his remarks said several people that are organized businesses will only operate in an organized system with laid down ground rules to avoid confusion; an important reason for SEC stepping in. He agreed that there was a need for accountability in the cryptocurrency ecosystem.

"Within the cryptocurrency space, there are different classifications of crypto assets technology that are backing it. To regulate the function of activity that cryptocurrency plays the regulators need to understand the function of the technological assets. Many activities are being conducted in the space already hence the need for SEC to step in. It is therefore imperative to provide a standard operating procedure within the Nigerian business environment" Owonibi said.

He said there is a need to perform detailed investigations to identify the virtual assets service providers and the businesses that trade crypto assets.

Speaking further Mr. Owonibi said the policy statement will help in developing the capacities of the ecosystem in Nigeria. This new guidelines for him will ensure foreign players present their footprint of activities in Nigeria to SEC, before gaining the clearance to issue crypto service to Nigerian citizens.

The financial expert was optimistic that the SEC statement gives digital assets a positive posture, as asset managers and corporates can begin to learn more about the opportunities which will open up the economy as people try out the new asset class.

Mr. Lucky Uwakwe Founder SaBi Groups, believed technology is a space that is difficult to regulate, and the mechanism to hold people accountable is not feasible.

Talking from the perspective of an industry player, Lucky mentions that there are ways for more people to migrate to trading digital assets in no distant time due to the borderless nature of blockchain. He acknowledged the statement by the Securities and Exchange Commission highlighting the fact that mechanisms are being put in place to checkmate the activities in the industry.

Speaking on the position of SEC Nigeria Uwakwe opined that it does not stifle technology growth but rather encourages innovation in the local scene.

Chimezie in his concluding remarks at the webinar stated that there is no regulation document yet as the rules will be made in another document to guide the operations of digital assets.  For now, the released document is just a policy statement. 

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