SA plans to regulate crypto trading in phased manner

‘Crypto assets will be brought into the South African regulatory purview in a phased and structured manner,’
Image: Bloomberg

South Africa has laid the foundation for finance watchdogs to set crypto-asset controls as the nation seeks to curb growing cases of fraud and improve the management of cross-border flows.

As digital currencies move from the periphery of the finance world to the mainstream, crypto-assets service providers have come under increased scrutiny worldwide. In Africa’s most developed economy the collapse of a Bitcoin trader late last year, alleged to be the country’s largest Ponzi scheme, and other cases of market abuse have highlighted the need for tighter rules, according to a statement by the nation’s Intergovernmental Fintech Working Group on Friday.

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“Crypto assets will be brought into the South African regulatory purview in a phased and structured manner,” it said. “It is, however, reiterated that with or without regulation, crypto assets remain inherently risky and volatile.”

A position paper by the grouping makes 25 recommendations and outlines a collaborative and activities-based approach for the creation of a regulatory framework. It also highlights the need for better financial literacy for consumers as the retail interest in digital currency grows.

In January, the daily value of crypto-asset trading exceeded R2 billion ($147 million) for the first time in South Africa suggesting significant appetite in a market that was largely going unchecked by regulatory powers.

The South African Reserve Bank said last month it is currently probing the feasibility, desirability and appropriateness of a central bank digital currency as electronic legal tender for general-purpose retail use.

The backing of the working group’s position paper will present the country’s regulators, including the Financial Sector Conduct Authority, with the required tools to begin implementing measures linked to its recommendations, it said.

“The dynamic development of the crypto market must continue to be pro-actively monitored, including maintaining knowledge on emerging international best practices through standard-setting bodies” and other measures, IFWG said.

© 2021 Bloomberg

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They are trying to “regulate” it the same way they regulate FIAT now.

Exchange controls should have long ago been abandoned. Maybe time to do it now?

Crypto will just become an offshore activity (investment) like so many other types of investment messed up by SA. There will be ZERO innovation here.

This may infact benefit the growth of the space, as long as there is not a ban on crypto/blockchain. Regulatory clarity is what will attract companies, in the US Ripple, the company that created the XRP cryptocurrency had considered moving their operations, because of a lack o regulatory clarity.

Protecting investors is the chief aim of these regulations, ponzi schemes and scams operating in SA like BitClub Network, where $720 mill was lost globally and Mirror Trading International where people lost millions of rands could have been avoided if these organisations where under the purview of the FSCA.

The Intergovernmental Fintech Working Group (IFWG) was put together to formulate regulatory framework for fintech,crypto/blockchain included within the IFWG there is a company called MecuryFX which deals with crossborder payments. This company has partnered with Ripple and SA exchange VALR cryptoto use the XRP cryptocurrency to make crossborder payments. Only a handful of companies from around the world could join, and a company with crypto/blockchain dealings was one of the chosen surely the regulation to be put forward will not prejudicial to MecuryFX’s crypto/blockchain operations, they will instead Foster and encourage such companies to come establish operations in SA.

”The difficult is what takes a little time: the impossible is what takes a little longer”‘

Fridtjof Jansen Norwegian explorer (1861-1930)

And rightly so, and not a moment too soon!

Regulate crypto?

Reserve bank about to launch a ZAR digital coin?

SARS can regulate foreign central bank (centralised) crypto’s ….impossible to regulate the decentralised

Crypto’s are the future…happening now and the bully boy central banks and tax authorities finally have an even opponent

Nigeria banned Bitcoin….has not stopped it becoming the “money” of choice

El Salvador is adopting bitcoin as legal tender in order to escape the tyranny of foreign central banks

End of comments.

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