South African Regulators To Rethink Cryptocurrency’s Position
South African regulators are preparing to adequately regulate the cryptocurrency market thanks to the increase in retail demand for Bitcoin and other cryptos.
South Africa’s Intergovernmental Fintech Working Group, or IFWG working under the name of the Crypto Assets Regulatory Working Group, published a paper detailing the roadmap it would take to regulate the cryptocurrency market.
The regulatory agency said there is a need to actively regulate the crypto market thanks to the massive retail demand for Bitcoin and other cryptocurrencies over the past few years. The paper discussed how the agency would regulate the market by monitoring and dictating the activities of crypto-asset service providers, or CASPs.
The government previously practiced a hands-off approach when it comes to cryptocurrency regulations. The South African Reserve Bank had warned the citizens several times that they can trade cryptocurrencies at their own risk and would be offered no legal protection should things go wrong.
However, the South African crypto market is now worth over 2 billion rands ($147 million) in daily trading volume. Hence, the regulators could no longer sit and watch. IFWG’s new paper pointed out that although a regulatory framework is on the way, it still believes cryptocurrencies remain inherently risky and volatile.
The IFGW will implement six principles to guide crypto activities in South Africa. The principles include; staying up to date with the international best practices in the market; encouraging digital financial literacy amongst retail investors; implementing measures in line with the risks; partnering with relevant bodies to regulate crypto assets; adopting the principle of “same activity, same risk” when deciding regulations; and taking an active-based perspective in the market.
The regulatory agency is set to regulate the crypto space in relation to three main areas. These areas are remittance laws, the application of financial sector laws and Anti-Money Laundering and Combating the Financing of Terrorism.
South Africa remains one of the leading crypto countries in Africa. Similar to most African countries, the crypto market in South Africa has experienced massive growth over the past few months.