Reports from Nigeria claim the Central Bank and SEC have agreed to collaborate and conduct research on regulating cryptocurrencies in the country.
According to a report from local publication Premium Times, the Nigerian institutions confirmed that they would work together during a virtual lecture organised by the Association of Capital Market Academics of Nigeria (ACMAN) in Abuja on Sunday.
The publication quoted Timi Agama, the Head of Department, Registration, Exchanges, Market Infrastructure and Innovation Department of SEC, who highlighted the necessity for developing regulations for the cryptocurrency space given the surge in interest and investment in the space over the past few months.
The Nigerian Central Bank has taken a strict stance towards the use of cryptocurrencies in 2021, having sent out a letter to local banks in early February ordering the closure of bank accounts that have dealings with cryptocurrencies.
The letter also calls for banks and financial institutions to identify individuals and companies that are transacting with cryptocurrencies or operating exchanges and shut down their bank accounts accordingly. The letter notes that ‘severe regulatory sanctions’ will be imposed on institutions that do not abide by the warning.
Despite this fact, Agama said that the Nigerian SEC needs to start establishing frameworks for the industry while making it clear that it would clamp down on any practices that allowed for money laundering.
“There is a lot of investment moving into the cryptocurrency market and the tendency is that it will reduce the amount of investments in the stock market. Part of the desire of the SEC even in the future is to provide a regulatory framework that will take care of all these challenges that we have seen internationally and the entire world is grappling with in terms of cryptocurrency and digital assets,” Agama said during the virtual conference.
Agama added that Nigeria needs to keep up the pace alongside the rest of the world and that they could not be left in a ‘static’ position amid increasing use and interest in cryptocurrencies.
Nigerian SEC sees crypto as securities
In September 2020 Nigeria’s Securities and Exchange Commission (SEC) released a document outlining how it intends to regulate cryptocurrency usage in the country in an effort to safeguard investors.
The document from the SEC highlighted its intent to not ‘hinder technology or stifle innovation’ but create standards that encourage ‘ethical practices’ to ensure a fair and efficient market.
“…the SEC has adopted a three-pronged objective to regulate innovation, hinged on safety, market deepening and providing solution to problems. This will guide its strategy, its regulations and its interaction with innovators seeking legitimacy and relevance.”
The Nigerian SEC then stated that it will regulate crypto-token or crypto-coin investment when the character of the investments qualifies as securities transactions.