In order to support innovation and enhance regulation within the blockchain and Virtual financial assets’ space, the Securities and Exchange Commission (SEC) has set up FinTech Roadmap Working Group.
The committee, which consists of officials from the regulatory agencies, tech experts and the private sector, has been saddled with the responsibility to work on blockchain and virtual financial assets framework of the Nigerian Capital Market.
While the committee headed by Chuka Agbu, SAN, will take into cognisance effective investor protection, financial market integrity, and financial stability, it also has the responsibility of imbibing global best practices on regulatory taxonomisation, classification of Cryptocurrencies (either as Commodity, Securities or Currency) and recommend a suitable model for adoption in the Nigerian Capital Market.
Why this matters: It is of common knowledge that people lack confidence in blockchain and virtual assets, especially corporate investors. Blockchain technology isn’t as widely used as it should be, largely because blockchain users don’t trust each other, as research shows.
Mistrust and regulatory uncertainty have over the years slowed down the advancement of blockchain technology. This is the reason why the first widely adopted blockchain, bitcoin, was expressly created to allow financial transactions “without relying on trust” or on governments overseeing the currency. Users who don’t trust a bank or other intermediary to accurately track transactions can instead rely on unchangeable mathematical algorithms.
Upshots: Irrespective of the fact that most people want laws and regulations to help make blockchain-based systems trustworthy, there is need to pay attention to if the concept of regulating technology system as the blockchain is realistic and attainable, especially in cases where technological neutrality takes a whole.
The newly established committee should operate on the basis that technology changes exponentially, and it is most likely to always render regulations outdated.