The country’s central bank, the South African Reserve Bank (SARB), in collaboration with the Inter-governmental Fintech Working Group (IFWG) has proposed new rules for cryptocurrency-related companies in the country.
“At this proposed level, an official body places specific requirements on providers of certain services in respect of crypto assets, without setting predefined conditions for formal authorization to provide crypto assets-related products or services,” SARB said.
The primary objective of the paper is to provide an overview of the pros and cons involved with crypto assets because a large amount of the country’s population is not educated about cryptos.
Additionally, the SARB stated that all available regulatory approaches that will be meted out to crypto firms would be elaborated in the paper so that these firms will not plead ignorance as an excuse.
Given this, the central bank proposes operating within the framework of a middle line between doing nothing and strict regulation on erring crypto firms.
What to Expect in South Africa’s Crypto Space this Year
The SARB has hinted that to kick-off with the South Africa crypto regulation, all digital currency-related firms including crypto exchanges and wallet providers would be made to go through a registration process, which is expected to be implemented by the first quarter of 2019.
“The phased approach, starting with the registration requirement, could lead to formal authorization and designation as a registered/licensed provider for crypto asset services operating in South Africa at a later stage,” the bank explained.
After which an analysis of the South African crypto regulation on related firms would be carried out, to examine how these firms have coped in the past, with necessary amendments expected to follow in order to provide a suitable environment for crypto participants in the country.
The SARB also aims to curb financial fraud in the country and has directed that all crypto transactions involving 25,000 South African Rand (appr. $1,820) and above should be reported to relevant authorities by registered crypto firms.
At the moment, the central bank urges investors to tread with caution and should not recognize cryptocurrencies as official electronic money. However, investors that still wish to continue with it will be doing so at his or her risk.