Why we granted approvals to Crypto Exchanges – SEC

The Securities and Exchange Commission has emphasised that the approval-in-principle granted to two crypto exchanges recently is in line with the commission’s desire to ensure that youths in Nigeria are given the opportunity to participate in the capital market.

The Director General of the SEC, Emomotimi Agama, who stated this during a meeting in Abuja Wednesday, said that in line with the desire of President Bola Ahmed Tinubu to engage with the youthful population in the country, it became important to create a structure that will enhance that participation of the youths and other Nigerians in the market.

The commission had last week granted approvals to Busha Digital Limited and Quidax Technologies Limited.

According to the SEC DG, “It is important that we act accordingly, we are a country but we cannot be left out of the global phenomenon that is beginning to take shape. The SEC as a future looking institution is poised to making sure that we are in the league of countries that do what is needed.

“As much as possible, we are building talents to be able to deal with the challenges that these asset classes could bring to our shores. A lot of young Nigerians are fully involved in it and we cannot shut the door against them, rather the intention of Mr. President is to have them inclusive in the capital market and that is why we are ensuring that there is regulation and no one is hurt at the end of the day. That’s our responsibility at the SEC by protecting investors and developing the market”.

Mr Agama said the SEC is doing all of these cautiously to ensure these institutions do not pose risks to the national economy and to citizens who are investors too.

He disclosed that the SEC’s programme on the digital assets exchanges comes from its virtual Assets Service Providers Regulation adding that in view of the nature of crypto exchanges and the entire industry, it was important to outline a regulation that allows the Commission to fully understand crypto exchanges and virtual financial assets services providers.

The SEC boss said the idea was borne out of the initial Regulatory Incubation Programme of the SEC in its desire to understudy fintech platforms and products that are new to the market in order to be able to dimension the risks that are associated with these institutions and their products as clearly, the SEC’s primary responsibility is investor production and market development.

“In our bid not to stifle innovation we decided to set up a Sound Box to be able to understand exactly what these companies are getting into, how it affects the customers, how it affects the Nigerian public and how it affects the Nigerian economy.

“That was the idea, soon after that with the emergence of the VAPS regulation, we thought it wise to move forward by setting up the Accelerated Regulatory Incubation Programme. The first stage is the Regulatory Incubation Programme, the next stage is the Accelerated Incubation Programme which takes care of the desires of a lot of institutions to be regulated by the SEC. As you are aware, non-regulation of these entities poses a serious risk to our economy and so it was important in building trust and in building confidence and more so”, he explained.

He emphasised that the commission has not yet outrightly licenced any exchange, but has provided an approval in principle adding that it is a controlled experiment wherein companies that have applied, meet the fit and proper persons test and other regulatory guidelines are invited into a regulatory incubation wherein they are understudied.

“It gives us an opportunity to know exactly what they are doing, we know the risks that they pose to our economy, we know the risks they pose to investors and the risks they pose to themselves as operators.

“The idea is you need to do that to be able to study them and provide all the guidance and regulations required by them to operate in the system seamlessly while also not defrauding Nigerians, not causing chaos to Nigerians, our economy and the entire system at large. We are making sure that they operate within regulations similar to what is obtainable also in other jurisdictions”, Mr Agama added.