The Nigeria Securities and Exchange Commission (SEC Nigeria) has set up a committee to work to help articulate recommendations on developing a regulatory framework blockchain and virtual financial assets framework for the Nigeria Capital Markets.
The Fintech Roadmap Working Group Committee will develop a supportive and regulatory framework for blockchain and virtual financial assets that is aimed at effective investor protection, financial market integrity, and financial stability.
The 10-member committee was informed by The Fintech Roadmap Report which was presented to the Nigeria Capital Community in August. The report had the following recommendations for the SEC:
- Classify cryptocurrencies as securities or commodities but not as currency
- Regulate and develop a framework around virtual financial assets exchanges
- Issue guidelines and standards for white papers and ICOs
- Develop a stringent framework for KYC and due diligence for ICOs and tokens
- Follow global best practices in payment, asset, and utility token taxonomy
As a result of the above recommendations, the recently instituted blockchain working group will have the following mandate:
- Develop a framework to support innovation and regulation within the blockchain and virtual financial assets
- Compare global practices on regulatory taxonomization and classification of crypto
- Recommend a suitable model
- Analyze the functional characteristics of digital assets to inform regulation
- Advise the SEC on approaches and guidelines to regulate financial virtual assets in relation to the capital market
- Articulate industry expectations regarding regulation of ICOs and STOs
- Review current AML/CFT and KYC regulations and suggest improvements to cater to the blockchain and virtual financial assets space
- Propose a cyber-security framework in line with recognized international standards
Officials from various regulatory agencies, the private sector, and tech experts comprise the committee officials whose assignment is expected to be completed by end of November 2019.
“A well regulated Blockchain and Virtual Financial Assets industry means a market where players and operators have the required confidence that could boost liquidity. Investors confidence is key to mass adoption. The working group will provide the needed framework that will achieve the aforementioned.
Our argument was that Blockchain and Virtual Financial Assets are new and unique in various ways. It deserves a specific working group.”
Part of the committee mandate is to compare global practices when it comes to taxonomy and classification of cryptocurrencies either as a commodity, security, or currency and recommend a suitable adoption model for the Nigerial Capital Markets.
The above is one of the initiatives by the Central Bank of Nigeria (CBN) to offer financial inclusion to over 36M nigerials still without bank accounts and bring bring that figure down to 20 million by 2020.
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