On Wednesday, the South African Reserve Bank (SARB), announced plans to establish a regulatory framework for cryptocurrency, Kuben. Naidoo, Deputy Governor of Central Bank, was revealed.
After years of stating that it wouldn’t regulate the crypto market, the Central Bank of South Africa changed its mind and now works to create a regulatory framework for digital asset transactions.
In a webinar titled: ‘The future of money, banking and crypto’, organized by financial services firm PSG Konsult Ltd, Naidoo said: “Our view has changed and we now regard it [cryptocurrency] We see it as a financial resource and hope to regulate its use. There has been a lot money flowing in to this area, so we need to regulate and bring it into mainstream.
The Deputy Governor said that the regulatory framework to allow cryptocurrency use will play a critical role in investor protection and trust and in creating a safe crypto ecosystem in South Africa.
“The use of crypto for money-laundering and other illicit activities is a source of concern. 90% of transactions involving crypto-currency in the US are for the purchase of opioids or gambling tokens,” Naidoo highlighted.
He mentioned that although regulations can take up to 12 to 18 months to be implemented, certain know-your customer (KYC), rules and licenses for trading exchanges will be in force much sooner. He stated that the Central Bank was close to finalizing exchange control rules.
Naidoo also mentioned possible plans by Central Bank to issue national Central Bank Digital Currency.CBDC). He said that the regulator is currently doing research and testing on a CBCD program.
Digital Road Ahead
According to Chainalysis’s recent report, South Africa is one the 10 top countries for cryptocurrency adoption in Africa.
The country’s crypto regulatory landscape is still in an uncertain state. Although regulators such as the Central Bank and Financial Services Conduct Authority (FSCA), have yet to implement regulations, their attitudes towards crypto regulations has changed.
It is not likely that any regulatory framework will be in place for the future. Such movements have been triggered by the rising concern of customer protection in the wake of the country’s $4 billion in cryptocurrency scams.
Regulating the crypto industry in order to make sure the technology becomes mainstream is vital. This also helps to establish key relationships such as those with banks.
Image source: Shutterstock
