SEC to tighten regulations on fintech ecosystem
The Securities and Exchange Commission (SEC) is set to implement stricter regulations within the fintech ecosystem to prevent funds mismanagement and ensure operators adhere to existing rules.
The Director General of SEC, Emomotimi Agama made this state during his keynote address at the Nigeria Fintech Week.
The move for the new framework aims to protect investors’ funds while fostering the growth of the fintech sector.
In 2023, seven Nigerian startups faced closure, resulting in a loss of $79.15 million for investors. While some of these closures were attributed to funding challenges, others were due to inadequate corporate governance.
Agama emphasized the need for fintech operators to comply with capital market regulations when raising funds.
Speaking further, he said, “If you’re a fintech raising funds as a public limited company, you must engage with the SEC. Private fundraising must also adhere to applicable laws,” he stated. “We cannot afford to leave this burgeoning sector unchecked.
“Large amounts of investment data could be misused without consent, and companies are increasingly raising public funds without adequate regulatory oversight.”
To balance regulation with innovation, he said the SEC is championing a “smart regulation” approach, applying existing capital laws tailored to the specific needs of fintech operators. The SEC’s FinPort portal provides guidance to fintech companies on regulatory requirements.
Agama explained that “Smart regulation is tailored to specific products. Regulations often are laid out without considering product peculiarities. Smart regulation adapts to these peculiarities.”
In addition to smart regulation, the SEC has introduced a “three-pronged approach” to regulating the fintech space: regulatory compliance, stakeholder confidence, and investor validation.
Agama noted the SEC’s commitment to supporting the over 200 fintech companies operating in Nigeria, emphasizing a friendly and accommodating approach. He stressed that the days of lax oversight are over, and the commission will enforce regulations to improve the sector’s structure.
