A new association temporarily called the Crypto Asset Association of SA (Caasa) is about to be formed to represent the interests of SA’s crypto players in the media and to government.
Invitations were sent out last week to nearly three dozen players in the industry and roughly a third of those have already signed on to the new association.
A recently released white paper entitled ‘Establishment of a South African Crypto Asset Association’ by AltCoinTrader lays out the case for setting up a voluntary, non-profit, non-competitive membership-driven association.
“The South African crypto asset sector has been beset by scams. The occurrence and subsequent reporting of which not only damages the reputation of the sector as a whole but also has a dramatic effect on investor confidence and ultimately discourages further adoption of crypto assets and related products and services,” says the white paper.
It’s also clear that the industry is about to be swaddled in regulations, where cryptos are likely to be shoe-horned into existing regulatory frameworks.
Says the white paper: “This poses a massive challenge to regulators due to the inherent nature of many crypto assets and there is a significant risk to the sector that we may be confronted by regulations that are irrational, unreasonable or unenforceable. Furthermore, whilst awaiting regulatory clarity the regulators have taken a position that existing regulations must apply. In some cases, these regulations stem from legislation drafted ~60 years ago and their application to a digital economy is seen by many as irrational and thus risks irreparable harm to the nascent crypto asset sector.”
Another motivation for the formation of the association is to present a single, collective industry view to the media, which view is currently dominated by a handful of crypto asset trading platforms (CATPs).
“We believe in the premise that, as an industry, we should not ‘stand back’ and await whatever comes our way, instead play a more active role in shaping our future role in the economy,” say the white paper authors.
The white paper cites several precedents of industry bodies being formed to represent a specific sector, such as the Banking Association of South Africa (Basa), the Payments Association of South Africa (Pasa) and the Association for Savings and Investments South Africa (Asisa).
The white paper outlines several objectives for the association, including:
- Promoting a regulatory environment that facilitates innovation and protects consumers, stakeholders and the broader public interest with respect to crypto assets;
- Strengthening the integrity, reputation and efficiency of the crypto asset sector while simultaneously reducing the effectiveness of scams and other criminal elements operating in the sector;
- Promoting a collaborative approach with legislators, regulators, as well as other business associations and stakeholders, to establish a stable, conducive policy and business environment.
- Promoting a central source of reliable and accurate information on the sector to promote responsible adoption of crypto assets.
“There is a feeling within the crypto community that if we do not organise and present a strong, credible front to the public and regulators, we will end up with an irrational and unworkable regulatory regime,” says white paper author David Porter.
“The crypto sector is relatively new, and the public has no easy way of knowing which players are reputable and which are not. Having an industry association with a code of ethics is one way to help solve this. We will be able to share information on questionable crypto investment schemes and hopefully avoid another MTI [Mirror Trading International] or Africrypt. And we need to speak with one voice when it comes to shaping regulations around the crypto space.”
Says Jon Ovadia, CEO of Ovex: “We’re very supportive of the efforts by AltCoinTrader to put together an industry body. It’s important for market participants to work with regulators and this should streamline the process.
“We were hit hard by a regulator misunderstanding the industry. The extent of the damage is still unclear. We do appreciate the response from the Financial Sector Conduct Authority (FSCA) and the apology issued, the problem is people only see the negative stories that catch headlines, and are less interested in the follow-up apologies.”