In a majority of the countries, some or the other movements are going on regarding the crypto assets and its uses. Recently, the South African Reserve Bank (SARB) has published a consultation paper which sheds light on how it looks at the crypto industry.
The consultation paper by SARB reveals that South Africa has no intention to put any ban on cryptocurrencies and crypto payments. The country believes that the sector should be regulated with the priority to protect the consumers and investors. The paper also elaborates the benefits and risks of cryptocurrencies. Aside from SARB, the major entities in South Africa which have contributed to the development of this paper include Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS).
SARB is careful to enforce regulations on the crypto space in the country as it is concerned regarding the fact that any mistakes will lead to ‘reputational risk.’ The bank is planning to impose a set of ‘limited regulation’ considering it as a middle ground between being inactive and putting an absolute ban.
In the paper, the document named ‘Consultation Paper on Policy Proposals for Crypto Assets’ clarifies that South Africa’s government does not want to ban either cryptocurrency trading or crypto payments at present. The paper also suggests that each of the crypto exchange platforms, payment service providers, and crypto ATMs, should be compulsorily registered with the Intergovernmental FinTech Working Group (IFWG). IFWG is a newly formed group by the South African government to foster fintech innovation while maintaining uninterrupted operations of the financial markets.
SARB noted, “At this proposed level, an official body places specific requirements on providers of certain services in respect of crypto assets, without setting predefined conditions for formal authorization to provide crypto assets-related products or services.”
As given in the paper, crypto-based firms will be required to obey the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) rules of the Financial Intelligence Centre Act.
However, the bank also emphasized that digital assets will not be considered as legal tender. The bank has scheduled to provide complete registration process by the end of first quarter of 2019. Notably, African investors are embracing the crypto assets Despite unclear framework for cryptos.