SEC plans severe sanctions against unregistered digital asset operators

N2.14tr CIS, N2.36tr Discretionary Now In Custody, Says Yuguda

The Securities and Exchange Commission (SEC) has said it would not hesitate to sanction and prosecute unregistered digital asset operators going forward as part of efforts to sanitise the market.

SEC also disclosed that the Collective Investment Scheme (CIS) funds as at first quarter  of 2024 stood at N2.14 trillion while N2.8 trillion is in the discretionary funds in custody.
 
The Director General of the SEC, Lamido Yuguda, who stated this at the virtual post Capital Market Committee meeting, yesterday, stressed that the idea of proposed sanctions is to ensure the protection of investors.

The Director General asserted that as part of the safeguards against illegal activities of the unregistered operators in the digital market, the commission has gone ahead to release a new set of guidelines to regulate the digital space.

He said: “So, all the necessary safeguards have been added to the new rules and at the moment because of the activities of certain platforms that have not been registered but were operating in Nigeria illegally, we have had to take a second look at these rules so that we can make them much better for regulation of digital assets space.

“The SEC will take very firm action in working in concert with other agencies of government to make sure that these operators that are not licenced are actually prosecuted and shut down. And you can see that in recent times, we have been sensitive to the operation of unlicenced operators.” Yuguda encouraged all bonafide operators to come forward to the commission to register as it would grant them access to operate in the market properly.

The SEC helmsman further said the commission was in talks with the Central Bank of Nigeria (CBN) and other stakeholders to ensure that the banking recapitalisation exercise is carried out seamlessly.

“So, we have also been working with some market participants to ensure that this process is done in a very smooth manner, making sure that the SEC and the market and the banks avoid all the mistakes we had in past exercises, highlight the benefit of the exercises and also make sure that investors that would invest in these offers are well protected,” he added. The SEC also announced that the implementation of its 100 per cent custody requirement for all funds being managed by registered fund/portfolio managers in the capital market has yielded meaningful result as a total of N2.14 trillion CIS and N2.36 trillion discretionary and non-discretionary assets are currently in custody as at first quarter (Q1) 2024.

Yuguda said the compliance would help protect investors’ assets and engender high levels of confidence in the market.

“When you have one single entity doing both, the asset of investors could be lost at the collapse of the entity but when you segregate the custody of the asset from the investment management function, you find out that it is a much better process because you are giving it to the entities that specialise on these functions,” he said.

Yuguda said the commission has embarked on an ambitious IT transformation programme that would help improve its internal efficiency and reduce time-to-market in its operations.

He added that the technology apparatus, which is currently at 75 per cent completion stage, would also improve the commission’s ability to detect infringements in the capital market.

On what it’s doing concerning the cryptocurrency market, the SEC boss stressed that the commission would do everything within its power to protect those that decide to invest in digital assets products.

“They are not really investing with operators who are actually taking advantage of the investing in those platforms,” he noted.