Blockchain, digital assets will revolutionise capital market, says Agama

Director General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama has stated that the commission’s approach to digital asset regulation recognises the potential of the new technology in revolutionising capital markets and shaping the Nigerian economy.

Agama who spoke while delivering a keynote address at the Businessday Blockchain Conference 2024, with the Theme: Building Africa’s Future: Harnessing Blockchain for Economic and Social Transformation, said blockchain technology has moved beyond being a mere buzzword to becoming an essential part of the global financial and economic ecosystem.

According to him, its decentralised, transparent, and secure nature has spurred innovations in various sectors ranging from finance to supply chains, healthcare and governance.
 The DG said in Africa, where there are significant issues such as financial exclusion, lack of transparency, and inefficiencies in public and private sectors, blockchain presents an opportunity to build a future where the challenges can be addressed.
Blockchain is a digital ledger technology that securely records and verifies transactions across a network of computers.

Each transaction is grouped into a block, and these blocks are linked together in a chronological chain. This structure ensures that once information is added to the blockchain, it cannot be altered or deleted, providing a transparent and tamper-proof record.

Essentially, blockchain is a decentralised system that enhances trust and security by allowing multiple parties to independently verify and validate transactions without needing a central authority.

Agama stated: “As the transformative potential of blockchain is being celebrated, it is important to address the role of regulation in enabling its growth.
 He pointed out that regulation is often viewed as a barrier to innovation, whereas it is essential to building a stable and trustworthy environment for innovation to flourish.

“We have introduced several measures to ensure that these innovations are harnessed responsibly: Accelerated Regulatory Incubation Program (ARIP) and Regulatory Incubation (RI) Program: The ARIP and RI Program were designed to on-board firms operating in the digital asset space and provide a controlled environment to test new models, products, and services.

“These programs foster innovation while ensuring that robust consumer safeguards are in place. The recent approval-in-principle granted to two digital asset exchanges and five firms participating in these programs is a testament to our commitment to enabling innovation.

“Our regulatory stance is clear, digital assets such as cryptocurrencies are classified as securities unless proven otherwise. We have established a registration framework that requires issuers and sponsors to prove their assets do not qualify as securities. This ensures that investor protection and market integrity are upheld while providing a level playing field for legitimate market participants”.

Furthermore, the SEC DG said the commission is consistently aligning with international best practices by collaborating with global regulatory bodies such as the International Organization of Securities Commissions (IOSCO), adding that this ensures that the commission’s regulatory framework remains robust, adaptive, and aligns with global standards, enabling cross-border collaboration and fostering investor confidence.

According to him, in this era of technological innovation, the question is not whether Africa will adopt blockchain, but how we will shape its adoption to maximise its benefits for all the people.

He urged stakeholders, governments, regulators, innovators, businesses and civil society to embrace blockchain technology for the sustainable development of Africa.

In addition, he stressed the need for regulators to continue to refine their regulatory frameworks to foster innovation while protecting investors. 
 He pointed out that the goal must be to create an environment that encourages responsible experimentation and rapid scaling of successful models.

Agama urged innovators to develop blockchain solutions tailored to Africa’s unique needs and focus more on solving real-world problems, such as financial exclusion, inefficient supply chains, and lack of transparency in governance.

“For our investors, invest in blockchain technology and partner with innovators to drive the adoption of blockchain solutions. Leverage this technology to create new business models that enhance competitiveness and create value for all stakeholders.

“For Civil Society and Academia, we expect that you will engage in research, advocacy, and education to build a broad-based understanding of blockchain and its potential benefits. Help us to demystify the technology and promote its responsible use in addressing societal challenges”.

Agama added that the SEC is committed to the journey of innovations with a shared vision, a spirit of collaboration, and an unwavering focus on building a prosperous and inclusive Africa.