The management of Securities and Exchange Commission (SEC) on Friday warned against investment in meme coins, including $Davido coin, describing it as highly risky and should be done with a full understanding of the associated risks.
The commission which issued the warning in a Circular dated June 14, 2024, obtained by journalists in Abuja, said it is not a legal tender.
The circular reads, “The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to a meme coin known as “$Davido” allegedly linked to a popular Nigerian singer, David Adedeji Adeleke aka Davido.
“Generally, meme coins are cryptocurrencies inspired by memes and internet jokes. They are often envisaged as a fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements”.
The commission also explained that meme coins are also not intended to serve as a medium of exchange accepted by the public as payment for goods and services, or as digital representation of capital market products such as shares, debentures, units of collective investment schemes, derivatives contracts, commodities or other kinds of financial instruments or investments.
SEC therefore advised the public that meme coins lack fundamental value and are purely speculative.
“The general public is further warned that investing in meme coins, including $Davido, is highly risky and should be done with a full understanding of the associated risk.
“Capital market operators are by this notice warned not to associate with instruments that fall outside the SEC’s regulatory purview. Such instruments should not in any manner be distributed or monitored through any capital market mechanism.”
The SEC also emphasised that it does not recognize $Davido as an investment product or investable asset class under its regulatory purview, as such individuals who patronize it, do so at their peril.
“The commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required”, the circular added.
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