South African financial regulators are laying the groundwork for a “phased and structured” regulation of cryptocurrencies. The move reverses a largely hands-off approach for the past seven years and is driven by the high level of retail interest in crypto in the country.
in a position paper Published on June 11, the country’s Intergovernmental Fintech Working Group, or IFWG, under the auspices of the Crypto Assets Regulatory Working Group, laid out a roadmap to introduce a regulatory framework that will focus on Crypto Asset Service Providers, or CASPs.
South Africa’s initial national policy towards crypto so far has been warlike, but also non-interventionist. Back in 2014, the National Treasury, in collaboration with the South African Reserve Bank and the country’s financial regulatory and financial intelligence and tax agencies, issued a public statement dedicated to the issue. Its tone was cautious but indiscreet, warning the public that they could trade crypto at their own risk and that no legal protection or recourse would be given in case of difficulties.
Commentators have noted that a number of factors, including the South African crypto market, have increased the daily traded value by over 2 billion rand ($147 million). earlier this year, has destabilized this former policy.
The new IFWG paper emphasizes that even as a structured regulatory framework is set to be phased out, crypto assets remain “inherently risky and volatile” and the potential financial loss from crypto trading activities remains high. happened.
Six broad principles will inform the country’s evolving outlook. These require an “activities-based perspective” that will ensure that the principle of “same activity, equal risk” orients the decisions of regulators; implementing measures in proportion to the risk; Taking a collaborative approach to crypto asset regulation; Keeping up to date with international best practices and promoting digital financial literacy among consumers.
The paper also lays out 25 recommendations for regulating crypto with respect to three main areas of concern: anti-money laundering and countering the financing of terrorism, cross-border financial legislation and the application of financial sector laws. This ultimately means that the Financial Sector Conduct Authority of South Africa will be tasked with the objective of preventing market abuse, such as fraud and market malpractice, and to take action against relevant criminals in the industry.
Along with the published letter, IFGW issued a Press release Outlining its strategy, which took into account its concerns about the nature of the asset class and the surrounding ecosystem. IFGW pointed to decentralization as a downside, not a plus, which leaves consumers and merchants without recourse to an authority or centralized entity that can resolve user errors, such as falsified crypto. Using wallet address.
IFGW also remains concerned about the manipulative nature of scam activities such as too much crypto marketing material, asset price fluctuations and Ponzi schemes. Actually this year The country’s biggest ponzi scheme ever A company targeting bitcoin includes (B T c) traders who deposited 23,000 BTC in investor holdings Reported 26,000 members worldwide.