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SEC Working With CBN On Crypto Trading Regulation, Says DG

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Nigeria’s Securities and Exchange Commission (SEC) says it is working with the Central Bank of Nigeria (CBN) for a better understanding and regulation of cryptocurrencies in the country.

The Director-General, SEC, Lamido Yuguda, said this at the 2021 first post-Capital Market Committee (CMC) virtual news conference.

Mr. Yuguda said the commission was in discussion with the CBN for a better understanding and regulation of the crypto assets.

He said the commission suspended the implementation of crypto assets guidelines due to a lack of access to Nigerian bank accounts.

“We are in discussion with CBN for both understanding and better regulating of this market.

“We will be able to come back to you later to inform you of the outcome of these engagements.

“But because of the lack of access to commercial bank accounts, we had to suspend our own guidelines of September 2020, the implementation of that circular is suspended until these operators are able to have access to Nigerian bank accounts.

“Remember that nobody operates in the Nigerian capital market if that person does not have access to a Nigerian bank account,” he said.

Mr. Yuguda, however, said that SEC remained very supportive of Fintechs and had invested so much in developing a framework to support their operations.

The comments followed last week’s declaration by the SEC that fintech allowing Nigerians access to foreign securities were operating illegally. Examples of those platforms are Bamboo, Rise vest, and Chaka.

“Let me say that the SEC remains very supportive of fintech. We have invested so much in developing a framework for supporting fintech in the various areas and fintech are acting in areas of crowdfunding, investment advice and cryptocurrencies and the like,” he said.

Mr. Yuguda said that the market had been disrupted by the apex bank prohibition on access to Nigerian bank accounts by the crypto exchange.

“In all other areas, nothing has changed, but in the area of crypto assets, you know that with the recent prohibition by the CBN on access to Nigerian bank accounts by crypto exchanges, that market has been disrupted.

“And the truth of the matter is that while the SEC had issued guidelines in September 2020 aimed at regulating this market, for now for all intents and purposes, because these exchanges do not have access to commercial bank accounts in Nigeria the market, for now, does not exist,” he said.

According to him, the commission recognises the impact of FinTechs on capital market activities.

He assured the public that SEC would remain accommodative of this development.

“We shall continue to engage players and support them to operate lawfully.

“Our aim is to ensure the delivery of safe products and services without stifling innovation,” Mr Yuguda said.

He, therefore, encouraged FinTech firms to approach the Commission for due registration and desist from operating illegally.

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eNaira

Official eNaira Website Goes Live

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The Central Bank of Nigeria’s (CBN) eNaira website has gone live a week before the planned launch of the digital currency.

The website promises easier financial transactions for users of eNaira, offers opportunity for peer-to-peer payments which allows users to send money to one another through a linked bank account or card; allows customers to move money from their bank account to their eNaira wallet with ease; can monitor their eNaira wallet, check balances and view transaction history; and make in-store payment using their eNaira wallet by scanning QR codes.

In addition, customers are allowed to scan the QR Code on the website to get started.

CBN Governor, Mr. Godwin Emefiele, while speaking to a gathering of foreign investors in New York, recently, had told his audience that because of activities surrounding the country’s Independence celebration on October 1, the earlier planned launch of the eNaira on same date would likely be rescheduled to October 4, 2021.
“The central bank would not want the event to take the shine away from the Independence celebration,” he said.

“We are going to be the first country in Africa to launch a digital currency. It is a novel idea because we think it will facilitate trade, Nigeria being the biggest economy in Africa, this will set the tone to tell Africa that we are ready to lead and we would indeed lead in trade and we would make sure that happens.

“Between all central bankers in ECOWAS, we are already working on certain collaboration to make trade, payment and banking system integrate in such a way to set example on the African Continental Free Trade Area (AfCFTA),” he added.

In line with global trend, the CBN recently took a major step towards the launch of its digital currency with its formal announcement of its engagement of global fintech company, Bitt Inc. as its technical partner for the project. To choose the technical partner, the CBN went through a rigorous vendor selection process in line with the Public Procurement Act, conducted by seven departmental directors and a Deputy Governor whereby several companies were evaluated. The evaluation was based on the following criteria: technology ownership and control; implementation timeline; efficiency, ease of adoption; support for anti-money laundering and combating the financing of terrorism (AML/CFT); platform security; interoperability; implementation experience.

Emefiele expressed optimism that the eNaira, would bring about increased cross-border trade, accelerate financial inclusion and lead to cheaper and faster remittance inflow. He said the digital money would lead to easier targeted social interventions, as well as improvement in monetary policy effectiveness, payment systems efficiency, and tax collection.

According to him, after its unveiling, Nigerians should be able to download the eNaira app from either Google plays store or Apple app store, on board themselves and fund their eNaira wallet using their bank account or with cash at a registered agent location.

“If you are a bank customer and you have say N10 million in your bank account, for your comfort of spending and making purchase, you can tell the bank to load N2 million out of your N10 million into your wallet.

“So, your bank balance in physical cash drops to N8 million, while your e-wallet carries N2 million. With that you can make purchases both within and across the country.
“There are so many variance of the eNaira. But this is where we would start because we are not going to pretend that there are not risks in opening your system up. We would look at the various products, determine the risk, determine the best way to mitigate the risk before we now open it up more and more,” Emefiele added.

Also shedding more light on Bitts, he said, “we chose them as a partner. In some other climes where they are, they have their software and they earn their money. But we chose that they would establish their company in Nigeria. “The CBN will own substantially stake in that company. It is a company that will be established in Nigeria and majority holding will be the CBN,” he added.

On his part, the CBN’s Director, Corporate Communications Department, Mr. Osita Nwanisobi, explained that the eNaira project had been a long and thorough process for the apex bank following its resolve in 2017, to digitise the local currency after extensive research and exploration.

Meanwhile, China’s central bank last weekend announced that all transactions of crypto-currencies are illegal, effectively banning digital tokens such as Bitcoin.

“Virtual currency-related business activities are illegal financial activities,” the BBC quoted People’s Bank of China to have said, warning it “seriously endangers the safety of people’s assets”. China is one of the world’s largest crypto-currency markets. Fluctuations there often impact the global price of crypto-currencies.

The price of Bitcoin fell by more than $2,000 (£1,460) in the wake of the Chinese announcement.

It was the latest in China’s national crackdown on what it sees as a volatile, speculative investment at best – and a way to launder money at worst. Trading crypto-currency had officially been banned in China since 2019, but had continued online through foreign exchanges. However, there has been a significant crackdown this year.

In May, Chinese state intuitions warned buyers they would have no protection for continuing to trade Bitcoin and other currencies online, as government officials vowed to increase pressure on the industry.

In June, it told banks and payment platforms to stop facilitating transactions and issued bans on “mining” the currencies – the trade of using powerful computers to make new coins.

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Cryptocurrency

Cryptocurrency Exchanges Rush to Cut Ties With Chinese Users After Fresh Crackdown

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Cryptocurrency exchanges and providers of crypto services are scrambling to sever business ties with mainland Chinese clients, after Beijing last Friday issued a blanket ban on all crypto trading and mining.

In a culmination of years of efforts to rein in the sector, 10 powerful Chinese government bodies including the central bank, said overseas exchanges were barred from providing services to mainland investors via the internet – a previously grey area – and vowed to jointly root out “illegal” cryptocurrency activities.

Huobi Global and Binance, two of the world’s largest exchanges and popular with Chinese users, have stopped new registrations of accounts by mainland customers. Huobi also said it would clean up existing ones by the end of the year.

“On the very day we saw the notice, we started to take corrective measures,” Du Jun, Huobi Group co-founder said in a statement to Reuters.

Du did not give an estimate how many of its users would be affected, saying only that Huobi, once the world’s biggest crypto exchange, had embarked on a global expansion strategy many years ago and seen steady growth in Southeast Asia and Europe.

Shares in crypto-related firms tumbled on Monday with crypto asset manager and trading firm Huobi Tech plunging 23% and OKG Technology Holdings Ltd, a fintech company majority owned by Xu Mingxing, the founder of cryptoexchange OKcoin, losing 12%.

TokenPocket, a popular service provider of crypto wallets, also said in a notice to clients that it would terminate services to mainland Chinese clients that risk violating Chinese policies and would “actively embrace” regulation. It added it welcomes cooperation from China in blockchain technologies.

Many Chinese crypto exchanges shut down or moved offshore in 2017, after China, once the world’s biggest bitcoin trading and mining centre, banned such platforms from converting legal tender into cryptocurrencies and vice versa. Then in May this year, China’s State Council vowed to ban bitcoin trading and mining.

Amid the crackdown, other types of Chinese crypto companies have been moving out of China over the past few months, said Flex Yang, founder and CEO of Babel Finance, adding that the impact from the latest policy would be “limited”.

The Chinese crypto financial services provider this month opened new business headquarters in Singapore.

Cobo, a crypto asset management and custodian platform, also recently moved its headquarters from Beijing to Singapore.

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Cryptocurrency

Coinbase Bonds Fall Again After China Bans Cryptocurrency

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Coinbase Global Inc.’s debut junk-bond sale fell to fresh lows after the Chinese government banned all crypto transactions and vowed to stop illegal crypto mining.

Paper losses for investors that bought the two tranches of notes at par now stand at roughly $100 million.

The $1 billion 10-year 3.625% bonds dropped more than 1.5 points overnight to 94.5 cents on the dollar, while the $1 billion seven-year 3.375% notes fell more than a point to 95.5 cents, according to Trace bond pricing data.

Coinbase’s bonds had already whipsawed since pricing on Sept. 14 as markets traded down over fears that the Evergrande contagion could affect global markets, and after dropping plans to launch a new crypto lending platform after the U.S. Securities and Exchange Commission raised concerns over the plan.

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