South Africa’s central bank has collaborated with global regulators to classify digital assets as financial instruments and regulate them from a money-laundering and terrorism-financing standpoint.
On Wednesday, October 19, South Africa’s financial watchdog made a move to classify digital assets as financial products as per the notice in the government gazette. This will open the doors for the regulation of cryptocurrencies in South Africa.
Digital Assets in South Africa
South Africa’s Financial Sector Conduct Authority (FSCA) also referred to crypto assets as “a digital representation of value”. The authorities spoke about different regulations applicable to digital currencies. This includes licensing crypto trading platforms and applying foreign exchange controls.
The announcement also makes it the first legislative step in building a legal framework for digital assets in South Africa. As per the current definition, a cryptocurrency isn’t issued by the central bank. Besides, the definition means that cryptocurrencies can be traded electronically or kept “for the purposes of payment, investment, and other types of usefulness.”
Earlier in May 2022, South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo said that the regulation of the crypto assets was in the offing. Sharing a timeline, he said that regulations will come in nine to fifteen months.
The Governor of SARB also added that the crypto regulations should be able to prevent theft, money laundering, and undermining of monetary policy. He further added that ubiquitous crypto would weaken the powers of the central bank. Brent Petersen from Easy Crypto, a crypto buying and selling platform, said:
“This was the first legal step that was required to bring the crypto asset industry within the South African legal framework”.
He also added that the declaration would be applicable to crypto trading platforms. It will also be applicable to those offering intermediary services in buying and selling digital assets.
Growing Crypto Market Regulations
Lawmakers across the globe have turned active in regulating the crypto space amid the current crypto winter. Also, the massive market volatility and demise of several crypto businesses bring the need for crypto regulations to the forefront.
As per the Global Web Index, nearly 15% of South Africans invested in Bitcoin in 2020. “This step would aid clarity, user protection and much-needed confidence in the ecosystem,” said Hannes Wessels, head for crypto exchange Binance South Africa.
The SARB has also collaborated with global regulators to classify digital assets as financial instruments. This would allow them to monitor the crypto market.