By Nkiruka Nnorom
The International Organisation of Securities Commissions, IOSCO, has cautioned its member countries over regulation of crypto-currencies – bitcoins and other virtual currencies- saying that such regulation may confer undue legitimacy on the products.
Virtual currencies, which is fast gaining popularity among the investing public due to the high rate of returns, has in recent time, become a source of worry to market regulators around the world over its safety, the risks involved for investors and markets, as well as the nature of regulation required for it.
Nigeria’s financial sector regulators, namely, the Securities and Exchange Commission, SEC, the Central Bank of Nigeria, CBN, and the Nigeria Deposit Insurance Corporation, NDIC, have, at various times warned Nigerian investors to steer clear of all forms of virtual currencies, saying that they are not legal tenders in Nigeria.
SEC had said that none of the individuals or companies promoting the use of the currencies is recognized by it or any other regulatory agency in the country and therefore stated that investments or transactions in such products cannot be protected by the regulators over risks and likely losses. Rising from a two day meeting in Madrid, Spain, the comity of regulators opined that regulating virtual currencies would deceive the general public into believing that there is regulatory faith in the products.
They, therefore, agreed to conduct a deep analysis of the nature of the products to enable a clear appreciation of the depth of regulation required to ensure adequate protection of investors.
They also agreed to launch an intensive public awareness initiatives to boost investor education and understanding, and accelerate the development of the right regulatory framework as may be necessary.
Speaking at the end of plenary, Dr. Abdul Zubair, Acting Director General, SEC, observed the benefits of tackling the issue of crypto-currencies at this time as it provides an opportunity for regulators especially in the emerging markets, to better prepare for the incursion of virtual currencies into their markets by putting in place the appropriate regulatory frameworks that will ensure transparency, efficiency and protection for investors.