Eight months after Nigeria’s central bank banned banks from serving crypto entities and investors, the country’s Securities and Exchange Commission (SEC Nigeria) has established a fintech unit that will help formulate regulations for the digital asset industry.
The financial watchdog announced that the new division will research crypto investments and products in order to come up with regulatory guidelines that will help protect investors.
Speaking on the development, Lamido Yuguda, SEC Nigeria’s Director General, said:
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain.”
Since the SEC regards all crypto assets “as securities unless proven otherwise,” Yuguda added that the Commission will step in with regulations once the digital currencies are integrated into the Nigerian banking system.
Although SEC Nigeria just recently established the fintech research unit, the agency announced its intention to regulate the crypto space last year, six months before the Central Bank of Nigeria (CBN) ban.
In September 2020, the watchdog said it was well equipped to provide regulatory guidelines for the industry.
At the time, Emomotimi Agama – Head, Registration, Exchanges, Market Infrastructure, and Innovation at SEC Nigeria – noted that the agency was closely working with several institutions. Those included Cambridge Centre for Alternative Finance, the World Bank, and others. The goal was to ensure that the Nigerian crypto ecosystem “is not left barren but guided with basic principles.”
Recall that in February 2021, CBN released a circular prohibiting banks and other financial institutions in the country from dealing with crypto or facilitating payments to entities or investors that transact with digital currencies.
Interestingly, the ban did not stop Nigerians from investing and transacting with such assets. As CryptoPotato reported in April, the country was quick to become the largest crypto peer-to-peer (P2P) market in Africa as young investors flock to the industry.
Following the increasing volume of crypto trades, the country’s apex bank announced that it plans to pilot a digital naira in October 2021.
According to reports, the CBDC project dubbed “GIANT” will act complementary to naira cash notes and will also be used to lessen forex restrictions in the country.