South African authorities call for regulation for the crypto space

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The South African Reserve Bank (SARB) has issued a consultation paper that gave a detailed assessment of the benefits and risks of cryptocurrencies. Several South African government agencies developed the document.

In the document, titled “Consultation Paper on Policy Proposals for Crypto Assets,” authorities note that a comprehensive set of regulatory guidelines must be created for the crypto space in the country. The paper explains that regulations should be set now and adjustments be made later if the need arise. Through the document, authorities clarify that they have no intention of banning cryptocurrencies, instead they are looking to create an effective regulatory framework for the industry.

Cryptocurrency activities have significantly increased In response to the growing crypto community, South Africa’s Intergovernmental Fintech Working Group (IFWG) believe it is high time proper regulations are put in place rather than waiting to see how the crypto market will unfold. It stated:

“The IFWG and Crypto Assets Regulatory Working Group are of the view that regulatory action should be delayed until the most appropriate regulatory approach has become clear, but to rather act and amend as innovation evolves. The IFWG is further of the view that, for innovation to thrive it does not necessarily mean lax or even no regulation should be implemented.”

IFWG comprises of representatives from Financial Sector Conduct Authority (FSCA), Financial Intelligence Centre (FIC), South African Revenue Service (SARS), National Treasury (NT), and the South African Reserve Bank (SARB).

The paper explains two crypto use cases; crypto trading and use of crypto for payment. It further explains that cryptocurrencies can be traded in three ways: on exchanges, at ATMs and through a peer-to-peer transaction.

The consultation paper further proposes that all crypto assets, custodial services, crypto ATMs and payment service providers trading in the country should register with IFWG. All crypto related businesses should also adhere to Anti Money Laundering (AML) and Counter-Terrorism Financing (CFT) requirements. A detailed process for registration is expected to be issued and implemented by the first quarter of 2019. All registered businesses are also expected to report suspicious and unusual cash transaction of 25,000 South Africa rand (about $1,829) and above.

Reportedly, the paper will be opened to public feedback until February 15, 2019.

Earlier this year, the South African government launched a regulatory working group that seeks to research more about blockchain and cryptocurrencies.