Virtual Assets: SEC Meets Major Blockchain, Crypto Associations

•Threatens punitive action against illegal trading 

•Wants naira delisted from P2P space

Ndubuisi Francis in Abuja and Kayode Tokede in Lagos

The Securities and Exchange Commission (SEC) yesterday met with the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), the umbrella body of all major blockchain and cryptocurrency associations in Nigeria, with a vow to apply all the powers vested in it to checkmate negative tendencies that constitute a threat to national interest.

The acting Director General of the SEC, Dr. Emomotimi Agama, who spoke during the virtual meeting, noted that in a bid to rid the virtual assets space of illegal trading activities, the Commission was reaffirming its resolve to go all out to act decisively in upholding the integrity of the capital market and protect the interest of all investors.

According to Agama, the agency would not hesitate to utilise all the powers within its mandate to handle issues that are negative and pose a threat to national interest.

Following recent developments in the virtual assets ecosystem, he expressed the need to delist the naira from all Peer-to-Peer (P2P) space to reduce the manipulation of the local currency value in the foreign exchange market.

The federal government recently accused a player in the virtual assets market, Binance, of manipulating Nigerian markets and damaging the national economy.

The SEC acting DG told the associations at the meeting that the Commission came as a partner to seek collaboration in order to ensure that the capital market community is one that is respected globally, for decency and fair play.

Agama, explained that the recent concerns regarding crypto P2P traders and their perceived impact on the exchange rate of the naira had underscored the need for collective action and dialogue within the financial market ecosystem.

He said: “There are basic practices as enshrined in the Investments and Securities Act 2007 and we expect that everyone will abide by those rules.

“Some may say no rules to play by, but do not forget that we have the Investments and Securities Act 2007 that some actions by participants today may be violating, hence the law is the law irrespective of the technology used.

“However, for specific Digital Asset regulatory regime that many have been calling for, we want to assure you that we are working tirelessly to establish an accommodating regulatory guideline for digital assets.

“The SEC as your regulator is desirous to work with you by providing a level of assurance that is needed by all that are operating within the rules of the market.”

He stressed that the proposed regulatory guidelines currently being fine-tuned with suggestions by various stakeholders would encompass various activities within the cryptocurrency ecosystem ranging from wallet providers, digital asset custodians and fund managers, cryptocurrency crowdfunding, Initial Coin Offerings (ICOs), Security Token Offerings (STOs), Initial Exchange Offerings (IEOs), cryptocurrency exchange platform providers, and virtual asset brokerage services, among others, ensuring that every Nigerian playing within the industry with the potential to contribute to economic progress is included, supported and properly regulated.

He assured: “I am poised for an innovative digital asset regulatory regime that will sustain Nigeria as Africa’s digital asset powerhouse with diverse solutions like Real World Asset Tokenisation (RWA) that will drive wealth and catalyse our capital market.

“We must explore innovative solutions to this problem and strike the right balance between encouraging innovation and safeguarding our national economic interests. This we will do in a friendly and firm manner, to enable us to achieve the desired result.

“We have a great market ahead of us and we have the talents and the people to make the market great. Mr. President is concerned about the teeming youths involved in this space and would encourage them to do the right thing and develop an ecosystem that we all will be proud of. It becomes necessary that we do what is right.

“Manipulations and all forms of activities that undermine our national interest would not be acceptable. It is therefore very important that we know that the SEC by virtue of the Section 13 of the ISA speaks to the regulation of all capital market activities.”

Agama expressed his gratitude to the leadership of BICCoN, and assured them of the commission’s readiness to work closely with all stakeholders in the cryptocurrency ecosystem to create a better country for all.

“With our deep understanding of this industry and the cryptocurrency sub sector, we recognize the importance of collaboration and cooperation in addressing the challenges we face; hence your insights and suggestions are invaluable as we seek to navigate these complexities together. We need your support as much as you need ours.

 “On that note, I want to emphasise that we are working on different fronts to sustain decent practices within our market, however, we are here to meet ourselves to know those playing within the sector decently and are open to hearing your suggestions on how we can effectively manage all obscure cryptocurrency trading activities within our jurisdiction P2P inclusive irrespective of the challenge we all know that P2P trading possess.

“We must explore innovative solutions to this problem and strike the right balance between encouraging innovation and safeguarding our national economic interests. This we will do in a friendly and firm manner, to enable us to achieve the desired result,” he said.

Agama added that one of the things that needed to be done was delisting the naira from P2P space in order to avoid the level of manipulation that is currently happening, enjoining participants in the crypto space to be patriotic enough to name and shame those that are involved in disrupting the markets negatively.

“I want to seek your co-operation in dealing with this as we roll out in the coming days the regulations that would take control of these areas.

“We want to assure that this management will ensure that people or institution that require registration with the SEC are quickly licenced. We assure you that we will give guidance when necessary and do well to streamline the processes to make it less difficult.

“We ask that those involved in sharp practices that undermine national interest should cease and desist. It is in our interest as a people to protect what belongs to us. We encourage you to reach out to us by naming and shaming the bad actors.”

“Together, I am confident that we can weed out bad actors and harness the immense potential of this progressive technology for the benefit of all Nigerians in tandem with this government’s renewed hope agenda.”

In his remarks, the Chairman of the Fintech Association of Nigeria, Dr. Babatunde Oghenobruche Obrimah, commended Agama for his bold steps and the collaborative approach with the ecosystem.

He pledged their commitment to work with the SEC chief executive and to extend all the support that will help him succeed in sanitising the virtual ecosystem.

On their part, BICCoN requested the setting up of a working group to tackle the various challenges facing the crypto space in a bid to move the market forward.