While most African governments are still pretty much undecided about how to deal with the incoming revolution that is blockchain and virtual financial assets, it appears Africa’s largest economy has chosen to quit sitting on the fence.
Reports have it that Nigeria’s Securities and Exchange Commission (SEC) has set up a committee to work on the framework for blockchain and virtual financial assets for the Nigerian capital market.
The FinTech Roadmap Working Group, as the committee is called, has been tasked with developing a mechanism that will support innovation and regulation withing the blockchain and virtual assets space.
Time To Regulate Blockchain & Crypto?
The regulatory mechanism put together by the group will have such aspects as effective investor protection, financial market integrity, and financial stability, as its core areas of focus. And the regulatory framework put together will be geared towards ensuring the achievement of those.
The FinTech Roadmap Working Group will be headed by seasoned financial expert, Ade Bajomo, who would also shoulder the responsibility of making sure the resolutions brought forward by the committee are in line with global best practices.
In view of that, the committee will want to keep an eye on global practices on regulatory taxation and classification of cryptocurrencies (either as commodity, securities or currency), after which it will be expected of them to recommend a suitable model for adoption in the Nigerian capital market.
The SEC will also seek guidance from the new fintech committee on approaches and guidelines on how to regulate the financial technology industry without overtly or covertly stifling the growth of the industry.
Who Made The Cut?
The SEC’s FinTech Roadmap Working Group is made up of officials from the regulatory agencies, tech experts, and stakeholders in the private sector. The group has until the end of November to come up with a practical plan for regulating both blockchain and virtual assets, with a view to supporting their introduction in the Nigerian capital market.
What Happens After The Committee’s Done Its Work?
Once the committee has done its work and tendered its report on how to regulate the new wave of digital businesses springing up across Nigeria, the SEC will take it up from there.
Drawing from the committee’s findings, the SEC said it will work with other regulatory agencies to create clear and specific licensing regimes for different fintech businesses in Nigeria.
Why Does It Matter?
Digital services and financial technology have been identified as key elements of the march towards financial inclusion and Nigerian authorities seem to be leaning towards leveraging its burgeoning fintech space for the achievement of that purpose.
The latest move by the SEC can be thought to be ultimately targeted at increasing financial inclusion in Nigeria and protecting investors’ fund, in line with best practices.
There is a huge market in the fintech space as an estimated 36 million Nigerians are still without bank accounts. The Central Bank of Nigeria (CBN) has made clear its intention of trimming that figure to just least 20 percent by 2020. And this new development probably has that in mind.
More so, it appears Nigeria is finally warming up to the idea of embracing the advantages of the blockchain and virtual financial assets. And it may soon be joining the likes of South Africa, Swaziland, and Egypt as some of the few African nations that have drawn up regulations for the new wave of digital assets.
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