The South African Reserve Bank is set to introduce new regulations around trading cryptocurrency in the country in the next 12-18 months, says deputy governor Kuben Naidoo.
Speaking in PSG’s latest Think Big webinar, Naidoo said that South Africa was largely on par with other countries when it comes to cryptocurrency regulation, with the initial hype around digital currencies and the technology dying down in recent times.
He added that most central banks around the world are now focused on regulating the broader crypto environment but also learning from it and seeing how it can be used. He added that it was important to separate the genuine technological advancements and the potential improvements to the payments system from ‘the hype’.
“We are not intent on regulating it as a currency as you can’t really walk into a shop and use it to buy something. Instead, our view has changed to regulating (cryptocurrencies) as a financial asset. There is a need to regulate it and bring it into the mainstream, but in a way that balances the hype and with the investor protection that needs to be there.”
- Naidoo said the first step is to ensure that cryptocurrencies are declared as a financial product, which means they would fall under the purview of the Financial Intelligence Centre (FIA) and be monitored for money laundering, tax evasion, and terrorist financing activities.
- The SARB then plans to develop a regulatory framework for the exchanges in South Africa to allow for crypto listing, which would include traditional banking regulations such as Know Your Customer (KYC) rules and exchange control regulations.
“Whether it goes up or down is not the question here – the job of the central bank is not to pick winners and losers in an investment race. Our job is to regulate something so that people have an adequate ‘health warning’ – but crypto is far too volatile to be used as a payment space.”
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