BusinessCryptocurrency: SEC Makes U-Turn, Backs CBN On Prohibition

Cryptocurrency: SEC Makes U-Turn, Backs CBN On Prohibition

aiteo

BEVERLY HILLS, February 14, (THEWILL) – The Securities and Exchange Commission (SEC) has reversed its stand on cryptocurrency and related products, saying it now supports the Central Bank of Nigeria (CBN) which had ordered banks to terminate all accounts connected to digital currencies.

Before now, SEC had approved the use of Bitcoin and other cryptocurrencies as securities in line with the global acceptance of cryptocurrency as a means of boosting the capital market.

In a sudden U-turn, SEC in a statement Friday, reversed its earlier readiness to accept Bitcoin and other cryptocurrencies as securities, saying it would no longer do so until such products are able “to operate bank accounts within the Nigerian banking system”, effectively aligning with the CBN order.

Explaining the reason for the policy reversal, the capital market regulator said, “The SEC made its statement at the time, to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows.

“Subsequently, in its capacity as the regulator of the banking system, the CBN identified certain risks which, if allowed to persist, will threaten investor protection, a key mandate of the SEC, as well as financial system stability, a key mandate of the CBN.

“In light of these facts, we have engaged with the CBN and agreed to work together to further analyse, and better understand the identified risks to ensure that appropriate and adequate mitigates are put in place, should such securities be allowed in the future.”

SEC noted that it would monitor the digital asset space to create a regulatory structure that enhances economic development, innovative and transparent capital markets.

This is coming a week after the CBN had ordered deposit money banks and other financial services institutions to discontinue from extending transaction facilities to traders in cryptocurrencies and related products, a development that has sparked wide protest and criticism.

Despite the outrage and condemnation triggered by the ban on cryptocurrency transactions by the Central Bank of Nigeria (CBN), the apex bank has said it will not back down on the decision to sanction violators of the directive..

The apex bank warned that strict sanctions would be applied against any violation of the directive, as it ordered banks and other financial institutions to freeze customer accounts used in trading cryptocurrencies and other related transactions.

But the decision has triggered outrage across the country, from many Nigerians, mostly young and unemployed people, who have invested in the digital currency and depend on it for a living.

Prominent Nigerians have also knocked the CBN for the decision, arguing that the policy was ill-timed and not well-thought out.

Former vice president, Atiku Abubakar, advised the CBN to consider regulating the sub-sector as against prohibition.

He observed that introducing policies like the prohibition of crypto during this period will restrict more capital inflows and worsen unemployment situation among the youth.

“This is definitely the wrong time to introduce policies that will restrict the inflow of capital into Nigeria, and I urge that the policy to prohibit the dealing and transaction of cryptocurrencies be revisited.

“It is possible to regulate the sub-sector and prevent any abuse that may be damaging to national security. That may be a better option, than an outright shutdown,” he said.

A former deputy governor of the CBN, Prof. Kingsley Moghalu advised the CBN to come up with effective regulation of the evolving digital currency revolution and possibly launch its own virtual currency as being done in some countries.

According to Moghalu, aside facilitating $500 million in transactions in the last five years, the cryptocurrency market employs hundreds of Nigerians and have also created new value chains that are bound to be impacted by the CBN decision.

Investors in the blockchain (as well as other industries) would also not be heading Nigeria’s way for as long as the CBN prohibition holds.

The President, Stakeholders in Blockchain Association of Nigeria (SIBAN), Senator Ihenyan, in a chat with journalists in Abuja, Thursday, advised that the better approach to deriving the benefits the cryptocurrency market in Nigeria offers is to regulate not to ban.

Ihenyan disclosed that the association had made efforts since 2017 requesting the apex bank to regulate the crptocurrency market in Nigeria but to no avail.

Reacting, former education minister, Mrs. Oby Ezekwesili, slammed the CBN on Twitter writing, “Frankly, CBN, all you needed to do was map all the legitimate risks associated with #cryptocurrency and gather a subset of the super brilliant Nigerian young minds in #FinTech so you listen and learn more. Learning is the greatest asset of the policy-maker. Never late.

“Our country’s DNA for irony is uncanny. At the same moment, as we celebrate one of our own leading a global trade institution, we have a memo from our Central Bank making country appear unprepared to embrace the future.”

Despite the mounting protest and opposition against the prohibition of cryptocurrency transaction in Nigeria, the CBN had written the banks and other financial institutions reiterating the apex bank’s stand that transactions in cryptocurrency in Nigeria remained prohibited.

The Senate, Thursday, summoned CBN Governor, Godwin Emefiele and the Director-General, Securities & Exchange Commission (SEC), Lamido Yuguda, to brief it on the opportunities and threats of cryptocurrency on the nation’s economy and security.

Some customers have confirmed receiving text messages from their banks telling them that in line with the CBN directive on cryptocurrency operation in Nigeria, the individual accounts have henceforth been declared inactive.

About the Author

Homepage | Recent Posts

Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

More like this
Related

Stage Set For Sinner, Medvedev For Rematch At Miami Masters

March 28, (THEWILL) - Jannik Sinner and Daniil Medvedev...

NERC Spots Error In Removal Of Tinuade Sanda As EKEDC MD/CEO, Other Management Staff, Clarifies Directive

March 28, (THEWILL) - The Nigerian Electricity Regulatory Commission...