- South African financial regulator decided to make a move and propose instructions for crypto regulations.
- The regulator notes that over 10% of South African citizens have invested in Bitcoin.
- With so many people working with crypto, it needs absolute laws for its use and management.
While the world of cryptocurrency still remains unregulated, this is something that might start to change soon. Interestingly enough, the first absolute crypto laws set might come from an unexpected nation — South Africa.
South Africa wants strict crypto regulations
South Africa seems determined to regulate digital currencies. Its financial regulator demanded it in a recently published policy paper. The regulator noted that the crypto sector lacks legal tender status in its instructions guidelines. The guidelines, as they are, would lead to the first absolute crypto laws in the world.
The country’s “Intergovernmental Fintech Working Group” (IFWG) suggests that the crypto-asset stratum needs to expand. This conclusion comes from the fact that a large number of the country’s citizens have invested in Bitcoin. One analysis claims that around 10.7% of people in South Africa made an investment in the prolific digital currency.
Now, the regulator demands clear policy standards, which would bring some order into the chaotic crypto space. The laws would, of course, execute disciplinary crypto intentions on a local level. They would provide clear instructions regarding the Financial Action Task Force’s ‘new technologies.’
There are several rules and suggestions that the regulator wishes to summarize, such as AML and Travel Rule suggestions. It will also bring new rules for the systematization of crypto businesses. Businesses would have to be fully compliant, especially when it comes to AML procedures.
What rules does the paper suggest?
The new policy paper announces the pending implementation of a rather strict crypto oversight on a domestic level. Not only that, but crypto use would also be strongly restricted. There would be specific cases of when and how cryptocurrency users could use their funds.
For example, the paper wants to prohibit the use of digital currencies as a settlement tool. However, it still wants to recognize crypto for domestic payment purposes and regulate it according to that.
The IFWG further added that “Payments using crypto assets will, in the interim period, be subjected to a regulatory sandbox approach.”
Finally, the paper also addressed the matter of raising capital. Specifically, it targeted ICOs. It said that regulations on ICOs must be in alignment with the country’s securities governance schemes. It recognizes that full alignment might not be a possibility. But, the regulations need to approach the full alignment as much as possible.
A fair approach considering the scams that plagued the industry in 2017-18.