Crypto-asset service providers will become accountable entities as a result of a number of changes to South Africa financial regulations. Further crypto laws will be finalised in 2022, according to a study from the South African Treasury.
In a nutshell, the proposed revisions would compel “any person offering advisory or intermediary services relating to crypto assets to be recognisable as a financial services provider under the act and to comply with the act’s obligations.”
Marius Reitz, the Luno crypto platform’s South African General Manager, explained the adjustments. Saying that “trustworthy crypto players welcome regulation,” and that “regulation is a key element of the cryptocurrency ecosystem.”
“Regulation will make it easier for the general people to identify between licenced and unregistered crypto service providers. As well as find a secure place to store and buy their cryptocurrency.”
It’s a different storey for Hermann Viver, the founder of Bitcoin Ekasi, a Bitcoin Beach-inspired enterprise in South Africa. They claimed that stricter “KYC and AML standards push already marginalised persons even further onto society’s fringes”. Finally, “authorities tend to address the situation with a one-size-fits-all solution,” which “turns out not to be a solution at all for many.”
“Ideally, there should be a barrier below which persons earning less than a certain amount are exempt from compliance/verification, because what harm could a person do with R5,000 per month [$330]?”
Money laundering and terror risk funding controls through crypto assets
Nonetheless, Bitcoin Ekasi and other members of the South African cryptocurrency market showed no surprise by the Treasury’s intention to tighten “money laundering and terror risk funding controls through crypto-assets.”
The South African government has already advised significant players like Binance against doing business in the nation. Unathi Kamlana, the commissioner of South Africa’s Financial Sector Conduct Authority, was also candid about the need to protect vulnerable crypto investors.
“A remarkable component of the SA Reserve Bank’s approach,” according to Luno, “is that it includes industry in its deliberations from the beginning”. Reitz’s predicament is straightforward:
“Regulation will also increase the number of official relationships between banks and crypto firms, allowing for increased use of crypto.”
Risks posed by so-called stablecoins
The Treasury study also mentions the “risks posed by so-called stablecoins,” which will be ready for discussion later this year. Central bank digital currencies (CBDCs) are being considered widely throughout southern Africa. In contrast to private stablecoins such as Tether, a CBDC is ultimately a mechanism for governments. In order to better monitor money flows (USDT).
South Africa is “investigating a digital currency,” according to Reitz. And he believes “additional CBDCS will be available in 2022”. The CBDC might give regulators a “safe haven.”