At a virtual seminar this week the the deputy governor Kuben Naidoo disclosed the plans of the South African Reserve Bank to move forward with regulation of cryptocurrency. Naidoo states that the bank considers cryptocurrency to be „assets“ rather than as traditional currencies.
The government will introduce some crypto-friendly legislation within about 12-18 months.
Crypto Adoption in South Africa
South Africa’s crypto-community is flourishing. According to research conducted by exchange Luno around 13% of South Africa’s residents have digital assets of some sort. Thus, the regulation of crypto is now a critical requirement as more than 6M people have contact with cryptocurrency.
The deputy governor pointed out it was evident that South Africa has kept up with other countries regarding regulation. It is important to note that the initial crypto boom has ended especially because of the current market downturn. Additionally, central banks across the world are determined to maintain some degree of control over the growing cryptocurrency space. Our goal is to guide you in choosing the best crypto robot, and we hope you will find Prime Advantage suitable for your needs.
While at the same time they’re trying to understand the technology’s foundation and come up with possible applications. Naidoo stressed the importance of distinguishing between developments related to crypto and the apparent hype about the market.
„Financial Assets“ not „Currencies“
The local investment company PSG’s Think Big webinar saw Naidoo speak about the possibility of a regulatory framework. He claimed that South African Reserve Bank will not consider cryptocurrencies to be just an instrument for payment. Instead, the authorities will declare the digital assets to be financial items in their own right.
Naidoo said it was reported that Reserve Bank has already abandoned plans to regulate digital tokens as currency. According to him, „you can’t walk into a shop and use it to buy something.“ Another reason to be concerned is the known high volatility of the market.
According to all definitions it’s not a form of currency, it’s an asset. It’s a commodity that can be traded and is made. Certain have backing, while others don’t. There are some that have an underpinning and real economic activity.“
SARB to Introduce Regulation
Under the new legislation, regulators may introduce cryptocurrencies as assets that are compatible with the widespread utility. They could do this by introducing cryptocurrencies as assets with mainstream utility. Reserve Bank will achieve this by a few actions, including the listing of crypto as cash-flow assets.
The crypto assets are under the supervision under the Financial Intelligence Center (FIA). The Center is responsible for regulating the crypto transactions in order to identify criminal the occurrences of tax evasion, money laundering and financing of terrorists.
In the following months following this, the SARB will be working to introduce rules for South African exchanges. Platforms that trade in crypto will receive guidelines on listing of tokens like Know Your Customer (KYC) verification as well as exchange control laws. The authorities will also implement tax laws, and force exchanges to provide cautions about the risks of investing.
In the past it was the SARB has investigated the possibility of releasing an electronic currency issued by a central bank (CBDC). In April of this year the Reserve Bank completed a technical proof-of-concept. Similar to April the Central African Republic created an official framework that will finally regulate cryptocurrency within its territory.