South Africa’s Intergovernmental Fintech Working Group (IFWG) has released a new position paper that calls for regulation of the country’s cryptocurrency ecosystem. In the document, the IFWG, a creation of the Reserve Bank of South Africa (SARB), “recommends a phased approach to bring crypto-assets within regulatory remittances through regulation of crypto asset service providers (CASPs). “
Crypto service providers to comply with AML/CFT requirements
49 pages document It also sets out “25 recommendations for a revised South African policy, the legal and regulatory position on crypto assets and related activities.” According to the IFWG, some of these recommendations are “already underway and in the process of being implemented, while some will take longer to be implemented.”
Meanwhile, in the position paper, the recommendations of the IFWG are divided into three broad categories. With regard to the first, the Working Group recommends CASP adherence to legislative requirements aimed at anti-money laundering and combating the financing of terrorism (AML/CFT). Some of these requirements include reporting “cash transactions of $1818.00 (R25 000.00) and above or any applicable limit at any time”.
Central Bank Arm Will Monitor Cross-Border Crypto Transactions
In the second category, the IFWG says it wants SARB’s Financial Oversight Division (Finsurv) to “assume supervisory and regulatory responsibility for monitoring cross-border financial flows in relation to crypto assets and CASPs.” In addition, the Working Group is recommending amendments to parts of the Exchange Control Rules to enable the placement of Crypto Asset Trading Platforms (CATPs) within the purview of relevant bodies. The status sheet says:
It is further recommended that a new mechanism should be created under the Exchange Control Framework to allow CATPs (licensed as above) to source or buy crypto assets for the purpose of selling them in the local market, which Finserve subject to the specified limits to be determined by .
In the third category, the IFWG recommends that crypto-assets be declared financial products. Such a declaration would require the CASP to “become a licensed intermediary and provide advice by such entities.” This, in turn, “allows for regulatory oversight and will help address the immediate exploitation of consumers by unscrupulous entities.”
IFWG is not supporting crypto assets
Meanwhile, the IFWG stressed that the issuance of the new position paper “should not be interpreted as an endorsement of crypto assets of any kind.” Instead, the working group argues that the decision was “driven by a combination of factors to formally bring CASP within the domestic regulatory remit.”
One of these factors relates to the need to “promote responsible innovation and regulate the conduct of these providers”. The high inherent risk associated with crypto assets as well as scam activity are other factors that prompted the IFWG’s recommendations.
Lastly, the IFWG is urging crypto-asset consumers to ensure that they fully understand the products and services they are coming into contact with, as well as the associated risks.
What are your thoughts on the IFWG’s latest position paper on crypto-assets? You can let us know what you think in the comment section below.
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