In a move to fortify regulatory oversight and deter illicit financial activities within the digital asset space, the Securities and Exchange Commission (SEC) has introduced stringent guidelines for digital and virtual asset service providers (VASPs).
Outlined in a notice released to Nairametrics, the SEC emphasized the pivotal role of these measures in bolstering the licensing, registration, and screening procedures for VASPs. The aim is to prevent individuals with criminal backgrounds from infiltrating the capital market as operators.
The SEC’s directive underscores its commitment to maintaining market integrity and safeguarding investor interests. By augmenting the existing regulatory framework, these new guidelines are poised to reinforce the Commission’s regulatory mandate.
The circular from the SEC also referenced previous regulatory actions, including the classification of digital assets in September 2020, which delineated the SEC’s oversight over various digital tokens. Additionally, the notice reiterated key provisions from the existing guidelines issued in May 2022, covering a spectrum of requirements for VASPs, including the issuance of digital assets as securities and the operation of digital asset platforms and exchanges.
Moreover, the SEC introduced procedures in April 2023 for implementing targeted financial sanctions against entities associated with terrorist activities.
The latest development includes the unveiling of an Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) onboarding manual tailored specifically for VASPs. This manual is designed to facilitate the licensing, registration, and ongoing screening of beneficial owners of digital and virtual asset service providers, thereby mitigating the risk of individuals with criminal backgrounds infiltrating the market.
Furthermore, following engagements with the Central Bank of Nigeria (CBN), the SEC revealed that additional feedback is being incorporated into the rules. These rules will soon be open for public comment before final approval.
In a statement, the SEC highlighted the significance of these regulations in fostering transparency and accountability within the digital asset ecosystem. The Commission also provided a compilation of relevant rules and regulations for the reference of potential applicants and the public, further emphasizing its commitment to promoting a robust and compliant market environment.
The introduction of these measures reflects a concerted effort by regulatory authorities to instill confidence in the burgeoning digital asset sector and mitigate the risks associated with illicit financial activities.
