The regulation of cryptocurrencies in South Africa appears to be a reality now and will create a framework for upholding compliance with digital currency and Bitcoin assets. The regulatory activities anticipated to begin next year are being pioneered by the South African Reserve Bank (SARB).
The guidelines stipulate that Bitcoin would be regarded as a financial asset. According to this classification, investors’ interests will be safeguarded, and industrial innovation will increase.
Individuals and businesses planning to offer cryptocurrency services must abide by the restrictions.
They are anticipated to function as financial service providers. Additionally, they must adhere to the Financial Action Task Force’s global standards (FATF). Among these operators are those who would provide cryptocurrency advice.
The National Treasury of the nation’s budget review, published in February 2022, had already signaled plans to classify cryptocurrency as financial assets. The state also intends to enhance reporting and oversight of cryptocurrency transactions. It would continue to abide by South African exchange laws through its involvement.
One of the regions with healthy cryptocurrency usage is still South Africa. The use of cryptocurrency, particularly Bitcoin, is becoming more widespread nationwide. This is because more individuals are exposed to cryptocurrencies than previously thought—over six million people, to be exact.
Regulations Processes For Bitcoin And Cryptos
Kuben Chetty, deputy governor of the South African Reserve Bank, announced the process for the regulations. According to Chetty, a new law for the legislation would be introduced in 12 months.
He said that the first step is to recognize cryptocurrencies as financial assets. The Financial Intelligence Centre Act would then schedule the listing of crypto assets. Other procedures include developing appropriate regulatory frameworks for cryptocurrency exchanges.
The regulations would impose certain amounts of taxation, exchange control restrictions, and KYC (Know Your Customer) requirements. Additionally, cryptocurrency exchanges would warn about the possible dangers of losing money while investing in cryptocurrencies.
In addition, Chetty noted that during the last ten years, SARB’s attitude toward the crypto industry has changed. The organization has gradually accepted bitcoins as forms of money. This was noticeably different from how it had been thinking for the previous five years, when it had assumed no need for oversight in rules.
Chetty emphasized that SARB did not regard cryptocurrencies as currencies. Digital assets cannot be used in regular retail payments because they are highly volatile.
SARB will introduce a central bank digital currency in addition to its regulation preparation for cryptocurrencies (CBDC). The institution finished the technological proof-of-concept for such CBDC as of April 2022.