The Securities and Exchange Commission (SEC) said that it has now set up a department that will study the crypto market in order to create regulatory policies for the sector.
The agency’s Director-General, Lamido Yuguda, revealed this development during a virtual interview with Reuters on Thursday in Abuja.
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain,’’ Yuguda said.
The commission has sought to regulate the crypto market on the premise that crypto trading is equally a security transaction. According to Yuguda, the regulation will be full frontal once crypto transactions are allowed back into the Nigerian banking system.
Although the SEC boss did not state a time frame, this information is an indication that crypto and fiat will reunite sooner than later.
The commission says it seeks to work with fintech firms to boost the marketing of domestic securities, which in turn will prevent capital flight.
Some crypto experts think this decision could have come earlier, allowing local fintech and crypto companies to pool their resources to support the SEC and help the institution write policies that drive economic development.
“This would have probably led to the fastest regulation development ever in the country had it came earlier than now. But if all goes well, restrictions on the Banking system from supporting crypto payments might be lifted,” Mayowa, an Ethereum Blockchain Engineer and Founder/CEO of Walletcloud (a secure Wallet as a Service platform), told TechCabal.
According to the SEC, the responsibility for creating a framework for crypto trading in Nigeria lies with the SEC and not the CBN, as it is done in developed nations. Yuguda also disclosed that the recent launch of the country’s controversial digital currency, e-naira, is the result of the commission’s engagement with the CBN.
The crypto sector in Nigeria has remained resilient despite the CBN restrictions and continues to be the second-largest crypto market in the world. The volume of crypto traded this year via p2p platforms has doubled that of last year already. More crypto-based companies are investing in crypto-education and more businesses and freelancers are willing to get paid in crypto.
“All of these market signals are weakening the naira against the US dollar and that’s not good for the government. One of the fundamental principles of crypto is decentralization – no single source of control,” Mayowa added. “What the SEC is trying to do is to come up with policies that would give them as much control as possible. It will be nice to see the reaction of the market to the policies they come up with.”