Crypto to Get Regulatory Certainty in South Africa

It seems as though the authorities in South Africa are finally seeking comments on proposed policy changes that could potentially offer cryptocurrencies (amongst other things) regular certainty. In this post we will be going over the new crypto policy in South Africa.

A New Crypto Policy

According to the South African Reserve Bank (SARB) and the National Treasury; an overhaul of the national payment system is on the way. This new crypto policy will feature a new set of infrastructures and arrangements, allowing users to transfer funds between individuals and entities. This has been long overdue as the current legislation backing the system (The National Payment System Act of 1998) is out of date.

This review will align the current legislation with the worldwide cryptocurrency trend. As well as this, it will ensure that the regulatory net covers sectors of the country’s economy that were previously in a regulatory grey-area (such as cryptocurrency). SARB states:

“[Seeks to] Allow/enable new or unregulated service providers, services, systems and instruments (e.g. virtual currencies, distributed ledger technologies and fintech companies)”

Safety and Efficiency

The National Treasury and SARB state; it is only through a new review that continued efficiency and safety of the current national payment system can be assured.

As the payments industry moves towards a digital age and becomes increasingly innovative, and financial technology becomes more advanced, the emergence of new payment methods, technologies, services, risks, participants and ‘payment systems’ have become increasingly prominent and  challenge the traditional payments regulatory landscape,

A joint statement from SARB and The National Treasury

Both SARB and The National Treasury will be welcoming comments until the end of February 2019.

In comparison to other African countries (Like Zimbabwe, which took an outright unrelenting anti-cryptocurrency stance); South Africa has been highly progressive in regards to cryptocurrency and digital assets. Even though there are regulations for crypto in South Africa, their crypto policy isn’t nearly as restrictive as other countries. Earlier this year, the authorities in several jurisdictions were placing bans on cryptocurrency. As a result, the most industrialized economy in Africa avoided a knee-jerk reaction; when the country’s central bank set up a team tasked to monitor cryptocurrency.

Surprise Consequences

South Africa is known to prefer self-regulation in this sector. At the time, an official at the Apex Bank argued that the regulation of cryptocurrencies could end in adverse effects.

Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.

In addition to this, the South African Reserve Bank has embraced Blockchain technology. This is seen in their support for public distributed ledger technology with it’s Project Khoka. Project Khoka is a blockchain platform that uses the Ethereum blockchain in order to process interbank settlements and payments. Three months ago, Project Khoka won an award for the Best Distributed Ledger Initiative at a global central banking event.

Leave a Reply

Your email address will not be published.

Read more ...

Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.