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South Africa’s Intergovernmental FinTech Task Force has released a new position paper on crypto assets. In it, they call for regulation of the country’s current cryptocurrency system.
The group includes members of various key players in the South African government. These include the revenue service, the reserve bank and the competition commission.
The document confirmed the group’s position. He says there is a need to initiate a step-by-step approach to bring cryptoassets into regulation through the regulation of cryptoassets service providers.
Assessment of the current crypto landscape
South Africa is one of the largest crypto markets in Africa. The country’s largest exchange, Luno, has seen steady growth in client numbers. In 2020, it almost reached a million new customers.
However, cryptocurrency regulations in the country are uncertain. As a result, he has been on the exchanges to make sure they work legally.
As a result, the efforts of the intergovernmental task force in this area are important to those who trade and work in cryptocurrency in the country.
Analyzing the current market, the group explained that it is evaluating the “underlying economic function of crypto assets rather than the specific technology applied or the entity involved.”
The recently published document outlines “25 Recommendations for a Revised South African Policy, Legal and Regulatory Position on Crypto Assets and Related Activities.
Three key areas of crypto regulation
The three areas on which these recommendations focus are the AML / CFT framework, cross-border financial flows and financial sector law enforcement.
AML / CFT
The group’s first area of intervention is the fight against money laundering and the financing of terrorism (AML / CFT).
Exchanges and other providers of crypto assets must comply with these legislative requirements, including registering with the Financial Intelligence Center (FIC), performing client identification and verification, performing due diligence on customers and keeping records of customer and transaction information.
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Additionally, the newspaper expects vendors to report cash transactions of $ 1,818 (R25,000) and more.
Cross-border financial flows
The second area is the tracking of cross-border crypto financial flows.
The group recommends that the reserve bank’s financial oversight department take “oversight and regulatory responsibility for monitoring cross-border financial flows with respect to crypto assets and PSAPs.”
This would require some changes to the exchange control regulations.
Financial sector laws
Finally, the group recommends a temporary measure to declare these assets as financial income.
This recommendation aims to ensure that providers of crypto assets remain under regulatory oversight. In addition, it aims to ensure that they “will help to combat the immediate exploitation of consumers by unscrupulous entities”.
A warning to consumers
However, the group made it clear that their document was not an endorsement of the cryptoassets.
Further, he warned consumers that “the crypto-asset ecosystem is evolving at a fairly rapid pace and developments continue to question the applicability of existing laws and regulations to emerging business.”
“Consumers are therefore strongly urged to ensure that they fully understand the products and services to which they are exposed, as well as the associated risks. “
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