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Nigeria: SEC Reverses Self, Suspends Approval of Cryptocurrency-Related Products

Nigeria: SEC Reverses Self, Suspends Approval of Cryptocurrency-Related Products

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Nigeria’s Securities and Exchange Commission has reversed its earlier decision to accept Bitcoin and other cryptocurrencies as securities, suspending the approval of digital currencies and related products days after the Central Bank of Nigeria (CBN) ordered banks to terminate accounts connected to digital currencies.

The agency in a statement on Friday said it would no longer accept cryptocurrencies until such products are able “to operate bank accounts within the Nigerian banking system”, effectively aligning with the CBN order.

The statement comes days after the country’s apex bank’s announced a ban on cryptocurrency-related transactions over its suspicion that digital currencies are being used for money laundering and terrorism.

“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” SEC said in a statement.

The commission, however, added that “the planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.”

“The primary objective of the Statement was not to hinder or stifle innovation, but to establish standards of ethical practices that ultimately make for a fair and efficient securities market,” SEC noted.

“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 mitigants are put in place, should such securities be allowed in the future.”

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