Fresh off the realization that cryptocurrency is now here to stay, the South African Reserve Bank (SARB) has released new consultation Papers proposing stricter regulations on cryptocurrency assets in the country.
According to the SARB, the main reason they made the consultation paper is to
– Provide an overview of the perceived risks and benefits associated with crypto assets;
– Discuss the available regulatory approaches;
– Present policy proposals to industry participants and stakeholders.
It addresses how much cryptocurrency has changed the economic landscape, especially as it poses a threat on the Central bank’s exclusive right to print money. The paper directs its reforms to non-government issued crypto-assets and not central bank digital currencies (which includes their cryptocurrency) and suggested that crypto asset regulations should be effected in 2019. “Given the related risk in crypto assets, it is proposed that South Africa moves to a higher level in 2019,” it read.
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The paper targets the use of cryptocurrency for illegal purchases and activities saying;
“In order to achieve anti-money laundering/combating the financing of terrorism (AML/CFT) requirements, more specific requirements will be necessary in line with the recent amendments to the Financial Action Task Force (FATF) Recommendations.”
It continued, “Therefore, in terms of the proposed level, the Financial Intelligence Centre (FIC) will include crypto assets service providers as an accountable institution and, as such, the accountable institutions will be under legal obligation “to comply with AML/CFT requirements in the FIC Act.”
The paper further reiterates that cryptocurrency shouldn’t be banned, rather heavily regulated as it would be risky if it isn’t. Saying “However, because crypto assets are not recognised as a currency, customers may be exposed to harm in an unregulated environment.” And then, the paper re-establishes that the South African government reserve all the rights to amend their policies when cryptocurrency is concerned.