SEC considering a framework to regulate digital assets

Lamido Yuguda, the director general of the Securities and Exchange Commission (SEC), stated that the SEC is committed to establishing an enabling regulatory environment that would ensure a balance between investor protection and technological advancement. The SEC acknowledges the disruption of fintech in the financial industry.

Yuguda revealed this in Abuja and stated that the SEC will intensify efforts to create a thorough regulatory framework to make sure that operators in the digital asset space carry out their operations in a way that protects investors and upholds the stability of the financial system.

In order to be better prepared to address identified concerns, he claimed that regulators needed to understand the digital asset area in order to create an adequate regulatory framework for fintech. He stated:

“The SEC will continue to monitor developments in the digital asset space and further engage/collaborate with all critical stakeholders, including the CBN, to create a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market” he added.

“We believe that fintech would not only bring about efficiency to the capital market but would also serve as a veritable tool for advancing Nigeria’s Financial Inclusion agenda. However, there is a need to develop an appropriate regulatory framework to ensure the safety of innovation to investors and preserve market integrity.”

Yuguda claims that the SEC’s strategy is in line with those of many other international securities regulators since in the US, the SEC mandates registration or an exemption from registration for platforms that offer to trade in digital asset securities and function as exchanges.

“In the United Kingdom, the Financial Conduct Authority (FCA) requires firms that carry on specified activities, by way of business, involving a crypto asset, to be authorized. Crypto assets are viewed as financial products in South Africa and the Financial Sector Conduct Authority (FSCA) requires persons carrying out associated activities to be regulated.

“In Malaysia, operators of digital asset platforms are required to be approved by the Securities Commission (SC) as recognized market operators. Several other securities regulators have taken similar positions.”

The SEC DG stated that the Commission is looking at digital assets that truly protect investors as part of its effort to implement the updated 10-year capital market master plan.

In addition to exploring blockchain technology to advance both virtual and traditional investment products, Yuguda noted that the SEC will encourage investment in some digital assets with investor protection at its core. He also added that the commission is in the business of protecting investors, not engaging in speculation.

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