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Nigerian SEC to develop concrete crypto regulation

Central bank’s ban will allow sufficient time to address the risks of the anonymous nature of crypto transactions, argues Amugo

Nigeria’s Securities and Exchange Commission has clarified its position on cryptocurrencies and digital assets in the country by stating that it seeks to collaborate with the Nigerian central bank on devising a concrete crypto regulatory framework.

The statement from the regulatory authority comes in the wake of the central bank’s ban on providing account services to crypto exchanges, a move that forced the SEC to suspend its proposal of a regulatory framework for the country.

Timi Agama, the head of registration, exchanges, market infrastructure, and innovation at the SEC explained that regulators in Nigeria cannot afford to ignore the concerns and potential of the $1.74 trillion crypto 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 at a virtual conference organized by the Association of Capital Market Academics of Nigeria yesterday.

“For us at SEC and capital market, it is something to look at, the world cannot be moving forward and we will be static, no”, he added.

The regulator further explained how cryptocurrency is a channel for attracting the attracting much-needed foreign direct investment, or FDI into the country and added that according to a report from the National Bureau of Statistics 26 out of the 36 states in the federation did not receive FDI last year, a trend that can be very concerning going ahead.

In contrast to this, Kevin Amugo, the central bank’s director of financial policy and regulation explained the bank’s decision by stating that the ban gives the central bank sufficient time to address the risks of the anonymous nature of crypto transactions. However, firms like CipherTrace and Chainalysis have developed tools that enable robust cryptocurrency forensic investigation making crypto transactions pseudonymous at best.

Further, crypto exchanges in Nigeria adhered to the country’s Know Your Customer and Anti-Money Laundering regulations including following best practices such as the bank verification number, or BVN, authentication.

Addressing the gathering during the ACMAN lecture Amugo confirmed the SEC’s statement by stating that the central bank is working with federal agencies and the SEC to develop a national regulatory framework for cryptocurrencies in Nigeria. Several stakeholders from the crypto industry also called upon regulators to pursue more nuanced laws rather than outright bans during the event.

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