By John Ikani
South Africa has laid the foundation for finance watchdogs to set crypto-asset controls as the nation seeks to curb growing cases of fraud and improve the management of cross-border flows.
South Africa’s financial regulator in a paper from the Intergovernmental Fintech Working Group (IFWG) yesterday with support from the Financial Sector Conduct Authority (FSCA) announced that the country, home to 59 million people, will start to regulate crypto assets “in a phased and structured approach.”
The IFWG recommended imposing anti-money laundering rules on crypto asset service providers, monitoring cross-border financial flows and applying financial-sector laws to the crypto industry.
While recalling that the recent Ponzi scheme of a Bitcoin trader late last year and other cases of market abuse has brought about the need for tighter rules around the cryptocurrency market in the country, the IFWG highlighted the need for better financial literacy for consumers as the retail interest in digital currency grows.
The paper done by the IFWG is expected to guide regulators and provide them with the required tools to begin implementation as recommended in the paper. The IFWG stated, “The dynamic development of the crypto market must continue to be pro-actively monitored, including maintaining knowledge on emerging international best practices through standard-setting bodies.”
What this means
As mentioned, South Africa intends to set cryptocurrency controls in a bid to reduce and ultimately eradicate the growing cases of fraud and improve the management of cross-border flows. The IFWG recommended imposing anti-money laundering rules on crypto asset service providers, monitoring cross-border financial flows and applying financial-sector laws to the crypto industry.
The need for this control is now important as there is increasing interest in cryptocurrency from the people of South Africa. In January, South Africa saw an increase in the daily value of cryptocurrency-related transactions to about 2 billion rand ($147 million).
Sean Sanders, CEO of Cape Town-based exchange Revix, bemoaned the slow rate of forming regulations in the country, saying it has stymied growth because customers “arrive at our platform with scepticism.”