In the first quarter of 2019, the South African Reserve Bank (SARB) will be releasing a policy paper on how cryptocurrency service providers may be required to register their business with the government. While this isn’t an outright crypto ban (at least), these strict regulations for crypto assets could change how cryptocurrency works in South Africa.
The South African Reserve Bank’s new consultation paper highlights 3 main approaches to crypto assets. These are:
In addition to this, the South African Reserve Bank (SARB) states that the core focus of this consultation paper leans on ‘non-government and non-central bank issued cryptocurrency assets and not on central bank cryptocurrencies.’
As it stands, the consultation paper will be open for the public until the 15th of February, 2019. During this time, everyone is free to give their opinion on all the cryptocurrency aspects in a draft. Regardless, this recommendation was set up by the ‘Intergovernmental Fintech Working Group’ (IFWG); a team including members of the SARB and national Treasury.
The IFWG and Crypto Assets Regulatory Working Group is of the view that regulatory action should not be delayed until the most appropriate regulatory approach has become clear, but to rather act and amend as innovation evolves
With input from the general public, the SARB intends to build a clearer picture of crypto assets and the impact they can have on the country as a whole.
Upon conclusion of the consultation phase, the regulatory authorities will specify the way forward through a policy instrument such as a guidance note or position paper aimed for the first quarter of 2019,
The recent wave of swindle cases in Africa surrounding cryptocurrency forced regulators to warn the public about these scams. Investing in these Ponzi schemes is a sure fire way to lose your capital.
The latest report indicates the concern of ‘Financial Services Commission (FSC) on ‘growing #Crypto swindles’. Consequently, one such scam #bitcoin venture misguided public to participate in the company’s offering.#CryptoNews #cryptoscams @Bitcoin https://t.co/l7pxprsb3n
— CoinGape (@CoinGapeMedia) January 12, 2019
As there is great financial risk associated with these fake schemes; the South African Central Bank decided to strengthen the chain of crypto regulations. As a result, this paper also states:
In order to achieve anti-money laundering/combating the financing of terrorism (AML -anti-money laundering/CFT – combating the financing of terrorism) requirements, more specific requirements will be necessary for the line with the recent amendments to the Financial Action Task Force (FATF) Recommendations
Be that as it may, we won’t be seeing an outright ban on crypto assets in South Africa. Instead, we are seeing the proposal of ‘limited regulations’. Though, authorities are also focusing on directing the specific requirements and responsibilities to service providers of crypto assets. As well as this, cryptocurrency service providers are also liable to comply with; AML (Anti-money laundering) and CFT (Combating the Financing of Terrorism) requirements.
Therefore, in terms of the proposed level, the FIC (Financial Intelligence Centre) will include crypto assets service providers as an accountable institution and, as such, the accountable institutions will be under legal obligation to comply with AML/CFT requirements in the FIC Act.
We have all known that strict regulation has been on it’s way to South Africa for a while now. I think the important thing to note is that we will still be able to legally use cryptocurrencies. While it’s a shame that we could lose the anonymous factor; there are still many other benefits to using crypto assets that make it all worthwhile.
What do you think these crypto regulations will mean for the future of cryptocurrency in Africa? Do you think it’s a good thing or a bad thing? Let us know your thoughts in the comments below!
This article is intended to educate and should in no way be seen as investment advice or an enticement to use the ice3x.com 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.