Nigeria's securities watchdog puts cryptocurrency regulation on hold

By Chijioke Ohuocha
ABUJA, Feb 12 (Reuters) - Nigeria's securities regulator has
suspended a planned assessment of cryptocurrency and its dealers
after the central bank ordered lenders to close accounts of
individuals and entities transacting in or operating in the
asset, it said.
The Securities and Exchange Commission (SEC) has sought to
regulate cryptocurrency investments on the grounds that they
qualify as securities transactions. It assesses crypto products
and dealers prior to admitting them for regulation.
"The SEC will continue to monitor developments in the
digital asset space and further engage all critical stakeholders
with a view to creating a regulatory structure," it said.
The use of bitcoin, the original and biggest cryptocurrency,
has boomed in Nigeria in recent years, driven by payments from
small businesses and a weakening naira currency which makes it
difficult to get the U.S. dollars needed to import goods or
services. Last week, the central bank barred banks and financial
institutions from dealing in or facilitating transactions in
cryptocurrencies, warning that banks which fail to act could
face "severe regulatory sanctions".
The SEC said regulation of crypto dealers affected by the
central bank's ban will be put on hold until they can operate a
bank account.
The securities regulator said the central bank had
identified certain risks within the digital asset sector. It did
not provide details of the risks.
The central bank has argued that cryptocurrencies, which are
unregulated and not legal tender, are risky for the user.
One banking executive, who did not want to be named because
they were not authorised to speak to the media, told Reuters
that lenders have been closing accounts to ringfence risk
because most cryptocurrency dealers were speculating.
The Senate, Nigeria's upper chamber of parliament, on
Thursday issued an invitation to the central bank governor to
explain the reasons for the ban as part of an inquiry into the
benefits and risks posed by cryptocurrencies.