South Africa’s financial watchdogs are gearing up to introduce a crypto regulation framework in the country. A report unveiled this news on June 14, citing a position paper published by the South African Intergovernmental FinTech Working Group (IFWG) via the Crypto Assets Regulatory Working Group (CAR WG). IFWG outlined a regulatory framework that focuses on crypto asset service providers (CASPs) through this publication.
According to the position paper, IFWG is looking into crypto regulations in a phased and structured way. Before taking this stance, South Africa’s approach towards crypto has been cautious but unintrusive since 2014. Although the country is now turning to regulate crypto, IFWG warned that cryptocurrencies are still risky and volatile. To this end, the entity suggested that consumers should be wary of investing in cryptocurrencies, seeing as they could easily incur financial losses.
Allegedly, this policy change comes after observers found multiple factors that rendered the previous approach inefficient. One of these factors is the rapid growth of the South African crypto market, which hit $147 million (£104.71 million) earlier this year.
25 recommendations on crypto regulation
IFWG also published a press release in which it made 25 recommendations on how to rein in the crypto sector. The recommendations focus on three primary areas of concern. These are Anti-money laundering and combating terrorism financing (AML/CFT), cross-border financial flows, and the application of financial sector laws. By concentrating on these facets, IFWG seeks to task South Africa’s Financial Sector Conduct Authority (FSCA) with preventing crypto fraud and punishing wrongdoers.
Per IFWG, six comprehensive principles will steer South Africa’s approach towards implementing effective crypto regulations. The first one is ensuring the proper regulation of cryptocurrencies, followed by maintaining an activities-based point of view to ensure regulators are led by a principle of the same activity, same risk, same regulations. The third principle is applying proportionate regulations that go hand in hand with the risks posed, and maintaining a collaborative spirit on crypto regulation.
The last two principles are proactively monitoring the crypto sector and fostering digital literacy among customers. In the press release, IFWG also cautioned that the decision to amend South Africa’s stance on crypto is not an endorsement of the nascent sector.
This news comes after a report unveiled South African authorities are investigating a crypto-related scheme that defrauded investors out of $80 million.
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Tanzanian President, Samia Suluhu Hassan has called for the adoption of cryptocurrency in the country. In a recent statement issued by the president, she emphasized on the need for the country’s principal bank to begin preparations for the usage and adoption of cryptocurrency. She further acknowledged that the East African region is lagging behind compared …
Crypto growing to a $1.6 trillion market without adequate regulations is a major worry for the head of Italy’s stock market oversight agency.
Paolo Savona, the chairman of the Commissione Nazionale per le Società e la Borsa (Consob) — Italy’s securities regulator — has raised alarms over crypto’s growing popularity in the absence of firm regulatory standards.
According to Reuters, Savona made this position known while delivering Consob’s annual report on Monday stating that the lack of clear-cut regulations creates an opportunity for criminals to utilize crypto for illegal activities. According to Savona:
“Without proper oversight, there could be a worsening in market transparency, the basis of legality and rational choice for (market) operators.”
Despite several research studies indicating that crypto criminality only accounts for a minute proportion of global cryptocurrency commerce, Savona has joined the chorus of financial regulators pushing the virtual currency crimes agenda.
El Salvador’s recent parliamentary vote to adopt Bitcoin (BTC) as legal tender has drawn criticism from several legacy finance gatekeepers. In the Netherlands, one Dutch official has called for a blanket ban on cryptocurrencies.
Speaking during the CNBC Squawk Box program earlier on Monday, Mohamed El-Erian, chief economic adviser at Allianz alluded to the emerging narrative, calling it “a tug of war between adoption and regulation.”
For Savona, criminals using crypto for money laundering and tax evasion are not the only problem. According to the Consob chairman, the proliferation of cryptocurrencies poses an existential threat to the ability of central banks to facilitate the sovereign monetary policies of their respective nations.
Given the extent of Savona’s crypto fears, the securities regulator panned the slow pace of activities concerning cryptocurrency regulations at the European Union level. The Consob chief stated that Italy could be forced to establish its own regulatory framework if the European Union takes too long to develop a region-wide set of laws.
However, not all the happenings on the crypto regulatory front are negative for the industry. Indeed, reports coming out of India suggest that the authorities have moved away from plans for a total ban towards more nuanced regulations. Even in the Netherlands, Dutch finance minister Wopke Hoekstra has spoken in favor of supervision instead of the prohibition of cryptocurrencies.