The Securities and Exchange Commission has suspended the approval of cryptocurrency and related products following the directive of the Central Bank of Nigeria which demanded that banks terminate accounts connected to digital currencies.
In a statement released on Friday, SEC, which had earlier disclosed its readiness to accept Bitcoin and other cryptocurrencies as securities, said it would no longer do so until such products are able to operate bank accounts within the Nigerian banking system.
The central bank has earlier banned all cryptocurrency-related transactions over its suspicion that digital currencies are being used for money laundering and terrorism.
The ban sparked controversies with fears that it might affect fintech, and its rising potentials to the Nigerian economy might be lost because Nigeria is the world’s second-biggest user of virtual currencies like bitcoins.
Amidst concerns the CBN’s directive countered its earlier position, the capital market regulator argued that there was no policy conflict between its regulations and the embargo placed on banks by the central bank.
“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking ssystem,” SEC said in a statement Thursday.
“The planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.
“The primary objective of the Statement was not to hinder or stifle innovation, but to establish standards of ethical practices that 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. 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.
“In light of these facts, we have engaged with the CBN and agreed to work together to further analyse, and better understand the identified risks to ensure that appropriate and adequate mitigants are put in place, should such securities be allowed in the future.”
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