The Intergovernmental FinTech Working Group (IFWG) is taking steps to formalise South Africa’s stance on fintech and innovation, aiming to produce a draft policy paper by early 2019.
The paper is set to present government’s take on developments in the sector for the first time since at least December 2014, when the South African Reserve Bank (Sarb) issued a position paper on virtual currencies. At the time, the central bank opted not to oversee, supervise or regulate the virtual currency landscape as it posed no threat to financial stability. The Sarb did, however, reserve its right to change its position “should the landscape warrant regulatory intervention”.
The decision to draft a policy paper is one of two outcomes of the inaugural workshop of the IFWG – comprising representatives from National Treasury, the Sarb, Financial Sector Conduct Authority (FSCA) and Financial Intelligence Centre (FIC) – held in April this year. According to Treasury, the workshop brought regulators, policy makers and industry players together to develop a “harmonised” approach to fintech-driven innovation and consider appropriate policies and regulatory frameworks.
The decision to draft a policy paper also comes amid calls for regulation, in a bid to bring legitimacy and stability to the industry, from some fintech players. Moneyweb previously reported that some industry players likened navigating the unregulated landscape to innovating in a dark room, in that firms did not have a clear understanding of which laws applied to them or how to respond to each other. Others, however, expressed concerns that regulation would stifle innovation.
The paper is to take such concerns as well as those raised at the workshop and through dedicated fintech workstreams into account. The workshop focused on private cryptocurrencies, crypto exchanges and initial coin offerings. Fintech’s potential impact on financial inclusion and associated risks, including consumer protection, and likely policy or regulatory solutions were also among the topics covered. It also sought to learn from the experiences of regulators that have implemented measures to facilitate innovation.
In addition to drafting a policy paper, the IFWG resolved to host another industry workshop by year-end.