South Africa to revise national policy position on cryptocurrency

South Africa’s financial regulators are laying the groundwork for the “phased and structured” regulation of cryptocurrencies. The move presents a reversal of the largely hands-off approach taken for the past seven years and has been driven by increasingly high levels 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 aegis of the Crypto Assets Regulatory Working Group, laid out a roadmap for introducing a regulatory framework that will center on crypto asset service providers, or CASPs.

South Africa’s initial national policy towards crypto has until now been one of wariness but also noninterference. Back in 2014, the National Treasury issued a public statement dedicated to the issue, together with the South African Reserve Bank and the country’s financial regulator and financial intelligence and tax agencies. Its tone was cautionary but unintrusive, warning the public that they could trade crypto at their own risk and would be offered no legal protection or recourse in case of difficulties.

Commentators have noted that several factors, including the South African crypto market’s surge to in excess of 2 billion rand ($147 million) in daily traded value earlier this year, have rendered this former policy untenable.

IFWG’s new paper emphasizes that even though a structured regulatory framework is set to be phased in, crypto assets remain “inherently risky and volatile” and the prospective financial losses incurred by crypto trading activities remain high.

Six overarching principles will inform the country’s evolving approach. These entail taking an “activities-based perspective” that will ensure that a principle of “same activity, same risk” orients regulators’ decisions; implementing measures proportional to risk; taking a collaborative approach to crypto asset regulation; staying up to date with international best practices and encouraging…

Read More