The Federal Government has issued a cautionary advisory to Nigerians, urging them to avoid investing in the cryptocurrency token associated with music sensation Davido. The warning comes a month after Davido introduced a new cryptocurrency token, or memecoin, inspired by himself.
In a statement released on Friday, the Securities and Exchange Commission (SEC) highlighted the significant risks involved with investing in meme coins, clarifying that it does not recognize $Davido as an investment product or investable asset class.
“The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to a meme coin known as ‘$Davido’ allegedly linked to the popular Nigerian singer, David Adedeji Adeleke, aka Davido,” the SEC stated. The commission explained that meme coins are cryptocurrencies inspired by memes and internet jokes, often promoted through social media communities and sometimes through celebrity endorsements.
“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 representations of capital market products such as shares, debentures, units of collective investment schemes, derivatives contracts, commodities, or other financial instruments or investments,” the statement continued.
The SEC emphasized that meme coins lack fundamental value and are purely speculative. “The general public is hereby advised 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,” the SEC cautioned.
The commission also warned capital market operators against associating with instruments that fall outside the SEC’s regulatory purview. “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 statement read.
Reiterating its stance, the SEC concluded, “Please note that the Commission 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 advisory underscores the importance of cautious and informed investment decisions, particularly in the volatile and speculative world of cryptocurrencies.