The top financial regulators in South Africa have proposed 30 rules that they believe will help regulate the cryptocurrency sector in the country.
South African Regulation To Be In Line With the FATF
The leading financial regulators in South Africa, including the South African Reserve Bank, jointly worked together to publish a policy paper with 30 recommendations for the regulation of the cryptocurrency sector in the country. According to the regulators, the policies would seek to comply with the digital currency standard already put in place by the Financial Action Task Force (FATF).
The regulatory agencies published their report Thursday. According to the regulators, the 30 policies aim to see South Africa regulate the crypto sector in accordance with the FATF, the global money laundering, and terrorist financing watchdog.
The proposal was the work of the South African Intergovernmental Fintech Working Group (IFWG) and the Intergovernmental Crypto Assets Regulatory Working Group. The IFWG is comprised of top financial regulators, including the South African Revenue Service (SARS), the South African Reserve Bank (SARB), the National Treasury, the Financial Intelligence Centre, the National Credit Regulator, and the Financial Sector Conduct Authority (FSCA).
The group explained in their paper that the purpose of these recommendations is to help provide a specific framework for the cryptocurrency sector in South Africa. The report stated that their aim is to provide specific recommendations for the development of a regulatory framework for cryptocurrency assets. This will also include suggestions on the required regulatory changes which will need to be implemented.
A Clear Outline
According to the policy paper, the first recommendation is that companies providing cryptocurrency services are regarded as CASPs (crypto assets and crypto asset service providers). The companies in this category include crypto trading platforms, funds and derivatives service providers, crypto ATMs, token issuers, custodial wallets, and other crypto custodial service providers.
The Financial Intelligence Centre (FIC) could be tasked with supervising the cryptocurrency service providers. As such, all CASPs would be required to register with the FIC before providing services within South Africa. Furthermore, the CASPs would also have to comply with the AML and CFT requirements, which include customer ID verification and other financial security checks.
The companies would be required to report to the FIC on any suspicious and unusual transactions conducted on their platforms. As such, they have to report cash transactions of R25,000 ($1,329) and above.
The report also recommends that the Financial Sector Conduct Authority should be in charge of licensing companies that wish to provide services related to the buying and selling of digital assets. The Financial Surveillance Department of the SARB should be given the supervisory and regulatory responsibility, respectively. In this way, the two authorities can monitor illegal cross-border financial flows of any crypto assets.
Overall, the Intergovernmental Crypto Assets Regulatory Working Group would continue to monitor all the activities carried out within the cryptocurrency sector in South Africa. The paper finally ended by stating that cryptocurrencies will remain without legal tender status and that they will not be recognized as electronic money. As such, digital currencies will not be allowed to be used for money settlements in the financial markets infrastructure.
South Africa is one of the largest economies in the African continent and regulating the crypto sector could see other African countries make similar moves in the future.