In a recently published consultation paper, the South African Reserve Bank (SARB) has put forth its view on the crypto industry and stated that the sector should be regulated on priority to protect the consumers and investors.
The paper was jointly developed by multiple major South African agencies including Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS), and the SARB, the central bank of South Africa.
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The central bank is cautious in imposing regulatory rules on the sector as it believes that any mistakes will lead to “reputational risk”. It is exploring options to work in the middle ground between doing nothing and imposing a blanket ban on the sector, which the bank had described as “limited regulation”.
“At this proposed level, an official body places specific requirements on providers of certain services in respect of crypto assets, without setting predefined conditions for formal authorization to provide crypto assets-related products or services,” SARB stated.
The SARB is considering many aspects to properly regulate the sector including the introduction of a mandatory registration scheme for all cryptocurrency exchanges and wallet platforms operation in the country.
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“The phased approach, starting with the registration requirement, could lead to formal authorization and designation as a registered/licensed provider for crypto asset services operating in South Africa at a later stage,” the central bank added.
The central bank, however, made it clear that it does not consider digital assets as legal tender.
The bank is aiming to come with the complete registration process by the end of first quarter of 2019. In addition, the cryptocurrency service providers would also have to monitor and report suspicious transactions, such as cash transactions of R25,000 and more.
Despite the lack of proper infrastructure, African crypto adoption is booming. Last year, African Bitcoin exchange Paxful reported $40 million in monthly trading volumes.
Earlier this month, South Africa appointed a working group to access cryptocurrency and blockchain concepts.