SEC: Nigeria is a key player in crypto market but trading is still volatile

The Securities and Exchange Commission (SEC) says Nigeria is a key player in the cryptocurrency market, especially in peer-to-peer transactions.

Emomotimi Agama, director-general of the SEC, spoke during the opening of the 2024 International Organisation of Securities Commissions (IOSCO) World Investor Week (WIW).

Agama, represented by Bola Ajomale, executive commissioner operations of the SEC, said the market is still very volatile, making investor protection crucial.

Also, he said the SEC has developed and implemented frameworks for regulating virtual asset service providers (VASPs) to address concerns such as fraud, money laundering, and market manipulation, while fostering innovation.

“Our frameworks balance the need to encourage innovation within a safe, regulated environment whilst maintaining investor protection,” Agama said.

“Crypto assets must be subject to clear regulatory oversight that ensures market integrity without stifling growth.

“Through this approach we have created a regulatory incubation programme within which new technologies and digital assets can be tested and approved for public use.

“The SEC has also developed an accelerated regulatory incubation programme specifically to encourage non-registered crypto operators (who are currently extremely high risk and banned) to present themselves for regulatory oversight.

“I must also add that as the aforementioned framework continues to evolve, enforcement action against illegal crypto platforms, ponzi schemes and market abuse will significantly increase in severity.”

He said sustainable finance is not only a global priority, but also a pressing issue for Nigeria as environmental, social, and governance (ESG) factors are becoming more important in investment decisions.

Agama said while Nigeria celebrates the growth of its market, stakeholders must also recognise the evolving risks that come with global market interconnectedness.

He said Nigeria is not insulated from economic volatility, cybersecurity threats, and financial crimes like fraud and market manipulation.

‘INVESTOR EDUCATION CRUCIAL FOR STABILITY, GROWTH OF CAPITAL MARKET’

Agama said investor education is fundamental to building a healthy market and the development of market confidence.

He noted that a well-informed investor base is crucial for the stability and growth of any capital market.

Agama said investor education empowers individuals to make informed decisions while protecting themselves from fraud, Ponzi schemes, misinformation and excessive risk.

According to the DG, Nigeria has witnessed increasing participation in the capital market, with more retail investors entering the fold.

“As financial products become more complex and technology-driven, from fintech innovations to cryptocurrency trading, it is critical and responsible for stakeholders to commit to equipping investors with the knowledge to navigate these markets confidently and responsibly,” he said.

“World Investor Week provides a platform for us to reinforce this commitment. Throughout this week, we will engage with investors, discuss best practices, and focus on improving transparency and accountability in financial markets.

“I encourage all participants to take these opportunities to learn and share knowledge, so we can continue building a robust, investor-friendly ecosystem.”

Agama said the focus for 2024 is apt and extremely timeous as it covers technology and digital finance, crypto assets and sustainable finance.

He said the three critical sectors will significantly influence the future of global capital markets, adding that while the potential rewards are immense, the associated risks are equally enormous.

Reaffirming the SEC’s commitment, Agama said the commission would continue to collaborate with exchanges and other stakeholders in Nigeria’s capital market to uphold the highest standards of transparency, fairness, and investor protection.

‘LAGOS AT INTERSECTION OF INNOVATION, FINANCE’

In his remarks, Babajide Sanwo-Olu, governor of Lagos, said the state, as Nigeria’s commercial center, is positioned at the intersection of innovation, technology, and finance.

Sanwo-Olu said the state has consistently adopted progressive solutions to promote economic growth, enhance financial inclusion, and generate wealth.

Represented by Sam Egube, deputy chief of staff of the governor’s office, Sanwo-Olu said the rise of digital assets and the growing influence of technology in finance offer both remarkable opportunities and challenges.

“Cryptocurrencies, blockchain, and digital assets are transforming how we understand value, transaction mechanisms, and investments. While their potential to democratise finance is significant, we must also be mindful of the risks they introduce, particularly in areas of regulation, security, and investor protection,” Sanwo-Olu said.

“The role of IOSCO in advancing investor education, regulation, and market integrity is therefore crucial as we transition into this new financial era.

“Sustainable finance is another key pillar of this event’s theme, and rightly so. As we seek to address global challenges such as climate change, inequality, and economic instability, it is clear that finance must be a force for good.

“Investments in green technologies, renewable energy, and socially responsible businesses are not only the right thing to do, but they are also sound business strategies for long-term value creation.”

Sanwo-Olu reiterated Lagos’ commitment to fostering an environment that supports sustainable development, encourages responsible investments, and promotes the well-being of both current and future generations.