The regulation of cryptocurrencies in South Africa seems to have become a reality and will pave the way for maintaining compliance of crypto and Bitcoin assets. The South African Reserve Bank (SARB) is at the forefront of regulatory activities which are expected to begin next year.
According to the rules, the regulations would treat Bitcoin as a financial asset. This classification claims that investors’ interests will be protected and more innovations will surface in the industry.
In accordance with crypto regulatory guidelines, individuals and businesses that intend to provide crypto-related services will follow established requirements.
They are supposed to operate as financial service providers. In addition, they should comply with the global guidelines set by the Financial Action Task Force (FATF). These operators include those who would offer crypto advice.
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The February 2022 release of the country’s National Treasury Budget Review had previously indicated steps to classify crypto as financial assets. Additionally, the state plans to improve the reporting and monitoring of crypto transactions. He would maintain compliance with exchange regulations in South Africa through his involvement.
South Africa remains one of the regions with healthy crypto usage. There is an increase in the popularity of crypto, especially Bitcoin, in the country. This is due to higher exposure among people as it records more than six million people exposed to crypto.
Possible Processes for Bitcoin and Crypto Regulations
Deputy Governor Kuben Chetty of the Reserve Bank of South Africa made a notification as part of the regulatory process. Chetty said the introduction of new legislation for the settlement would be 12 months away.
He said the first step is the declaration of crypto as financial assets. Next, the list of crypto assets would then be programmed through the Financial Intelligence Center Act. Other processes would involve creating appropriate regulatory structures for crypto exchanges.
The rules would inculcate requirements at certain levels of KYC (Know Your Customer), taxation and control laws for exchanges. Additionally, crypto exchanges would issue a warning stating the potential risks of losing money via crypto investments.
Further in his observation, Chetty revealed a shift in the SARB’s stance towards the crypto industry over the past decade. The institution has gradually accepted cryptocurrencies as financial assets. This was notably contrary to his disposal over the past 5 years as he did not expect any need for oversight in the regulations.
Additionally, Chetty pointed out that the SARB does not take crypto as a currency. In his classification, digital assets are highly volatile and cannot be used in day-to-day retail payments.
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Along with its regulatory preparations for cryptocurrency, the SARB is set to launch a central bank digital currency (CBDC). In April 2022, the institution completed the technical proof of concept for the CBDC.
Featured image from BBC, chart from TradingView.com