Cryptocurrencies: SEC backs CBN, to suspend affected parties from fintech framework

The Securities and Exchange Commission (SEC) says it will suspend the admittance of all persons affected by the Central Bank of Nigeria’s circular on cryptocurrencies into its Regulatory Incubation Framework for Fintech firms.

In a statement on Thursday, the commission said the assessment of all persons and products affected will be put on hold until such persons are able to operate bank accounts within the Nigerian banking system.

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

The commission, however, said 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.

“The commission 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

“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 Sept. 11, 2020, and the CBN circular of February 5.

“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 commission said that the primary objective of the statement was not to stifle innovation but establish standards of ethical practices that would 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,” it explained.

“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.”

SEC said that it had engaged the CBN and would continue to work with it to understand the identified risks and ensure adequate mitigants are put in place.

The Central Bank of Nigeria recently directed banks and other financial institution to close accounts of persons or entities involved in cryptocurrency transactions.