The second coming of Donald Trump, who is said to be favourably disposed to cryptocurrency business, as the president of US may have put the Nigerian regulator, Securities and Exchange Commission (SEC) under scrutiny.
With the world as a global village, some analysts say recent increase of activities in the virtual assets subsector leading to rise in the assets holdings by foreigners as well as Nigerians in Diaspora may have revved up activities that could require more surveillance and monitoring on the part of SEC.
“Possible increased investment and adoption by Trump’s administration is expected to create a more favourable environment for cryptocurrencies, hence the need for the Nigerian regulators to reassess their approaches to regulation. This could be in the areas of innovative and business-friendly regulations, strict monitoring and supervision that should close the gaps that resulted in the country losing billions of dollars as revealed by CBN last year. Understandably, CBN is preoccupied with some economic policy demands and new capital base for banks, these should, however, not make them lose sight of the fact that it has some role to play in the emerging scenario, ” says an analyst who preferred to remain anonymous.
“The potential increase in holdings of virtual assets by Nigerians both within and in the diaspora may also prompt SEC to review its regulatory framework. The commission may need to consider new rules and guidelines to accommodate the growing demand for cryptocurrencies and ensure that they are used in a safe and secure manner,” says another analyst in a mailed message to MBN.
However, the commission recently warned those that applied for new licenses to be guided by rules of the game by ensuring that the requirements are met.
Specifically, SEC had observed and cautioned that some applicants for virtual asset service provider (VASP) licenses do not meet regulatory requirements and would have their applications rejected.
Emotimi Agama, SEC Director-General, however assured that the commission will continue providing clarity on complex issues to assist in the registration process.
Agama’s warning comes several months after SEC issued its first licenses under the Accelerated Regulatory Incubation Program (ARIP).
“SEC’s recent warning to new license applicants to be fully compliant with requirements suggests that the regulator is taking a cautious approach. The commission may need to balance the need to encourage innovation with the need to protect consumers and prevent financial instability,” says an operator.
But SEC, would rather not comment on its level of preparedness for the new challenges with international dimension as well as latest developments on the new applicants as its spokesperson, Bagudu Mohammed Waziri did not respond to MBN inquiries sent to him since last week
Lessons from Recent Lapses
The analysts were unanimous in their submissions that the lapses in regulatory supervision that cost the country billions of dollars, as revealed by CBN should serve as a cautionary tale.
They advise of the need for SEC to learn from these mistakes and ensure that its regulatory framework is robust enough to prevent similar lapses in the future.
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Consequently, they offered some suggestions, including the development of effective risk management strategies to mitigate potential risks associated with cryptocurrency investments; ensuring that investors are protected from fraudulent activities and have access to accurate information about cryptocurrency investments timely and collaboration with international regulators to ensure that Nigeria’s regulatory framework is aligned with global best practices.
Indeed, the CEO of Yellow Card Financial Inc., a pan-African focused digital assets exchange, recently admitted that he received increased interest from traditional banks and expects regulators to act quicker on establishing rules for the sector following the inauguration of crypto-friendly US President Donald Trump.
“With the US moving this way, I think that you’ll see a lot more speed from various governments around Africa in terms of getting to a point of regulatory clarity,” Chief Executive Officer Chris Maurice said in an interview last Wednesday, as reported by Reuters.
“This gives us more confidence that over the next year or so, you’re gonna see sweeping regulatory change across the African continent,” Maurice added
