Crypto firms approval NOT full licences, says SEC

The Securities and Exchange Commission (SEC) says the recent approval of crypto exchanges is “a controlled experiment” to protect investors and the Nigerian economy.

Emomotimi Agama, director-general (DG) of the SEC, spoke on Wednesday during a meeting in Abuja.

On August 29, the SEC granted Busha Digital Limited and Quidax Technologies Limited “approval-in-principle” to commence operation under the accelerated regulatory incubation programme (ARIP).

Speaking during the meeting, Agama clarified that the commission has not yet fully licensed any exchange.

He said the approval-in-principle serves as a controlled experiment in which companies that have applied, “meet the fit and proper persons test and other regulatory guidelines are invited into a regulatory incubation where 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,” Agama said.

“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.”

Agama said the approval-in-principle granted to both crypto exchanges aligns with the commission’s desire to ensure that Nigerian youths have the opportunity to participate in the capital market.

He stressed the need to create structures that will enhance the participation of the youths and other Nigerians in the market.

“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 boss said.

“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.”

Agama said the SEC is cautiously implementing measures to prevent risks to the national economy and protect investors.

He said the agency’s programme for digital asset exchanges is based on its virtual assets service providers regulation.

Agama said the nature of the industry makes it necessary to establish regulations that enable the SEC to understand crypto exchanges and virtual financial asset service providers.

He said the concept originated from the SEC’s initial regulatory incubation programme, which aimed to study fintech platforms and emerging market products.

“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,” the SEC boss said.

“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.”

Agama said the lack of regulation in the industry threatens the economy, making it essential to establish trust and build confidence.