In an attempt to halt the flood of fraudulent crypto activities in South Africa, Intergovernmental Fintech Working Group has set the tone for the future of cryptocurrency in a paper that outlines their position on regulation.
Head of SA’s financial watchdog, Olaotse Matshane provided a foreword in the paper thanking Industry participants in the South African crypto asset ecosystem:
“…to the industry participants in the South African crypto asset ecosystem: a sincere ‘thank you’ for your continued patience and willingness to engage with the regulatory authorities to discuss complex pain points and ensure South Africa’s position on crypto assets remains appropriate and fit for purpose. The IFWG’s Crypto Assets Regulatory Working Group will continue to engage domestic industry participants on new and emerging use cases in the crypto asset ecosystem as the industry continues to evolve at a very rapid pace.”
The paper itself provided details into South Africa’s regulatory recommendations for digital assets which have been grouped into three categories: Implementation of AML/CFT framework, Framework for monitoring cross-border financial flows, and the Application of financial sector laws. The paper is the result of a joint initiative that includes the National Treasury, the Financial Sector Conduct Authority, the South African Reserve Bank, the Financial Intelligence Centre, and the South African Revenue Service.
IFWG chairperson Matshane brought up the significant increase in crypto assets, and the incumbent need to regulate them:
“Global daily trading values have also increased significantly over the past few years, currently averaging in excess of $200-billion, and on some days exceeding $400-billion. While crypto assets’ viability as a widely used means of payment remains untested and an open question, the market has demonstrated significant resilience over the last decade. The use cases for crypto assets as an alternative – albeit highly speculative and risky – investment class and as a cross-border remittance instrument, appear to be gaining some traction among retail customers,”
While regulation of crypto has increased, few countries have implemented stringent rules for cryptocurrency as of yet. In terms of the impact of South Africa’s plan to regulate crypto, many would argue that it is a necessary step that will both limit a crypto company’s ability to function if they need to maintain every regulatory requirement, but overall is a necessary step for crypto to be regulated and brought into the mainstream.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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