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New regulations introduced by South Africa’s central bank are in effect, aimed at regulating crypto activities in the country. The changes were put forward at the end of September, and last week, the regulations were reviewed by the country’s financial services regulatory body, the South African Reserve Bank (SARB), which published its findings on Wednesday. The new regulations are part of the country’s efforts to clamp down on money laundering activities, cryptocurrency speculation and other illegal activities.
South African regulators have sought to reach a cryptocurrency policy to better regulate the industry. The Financial Intelligence Centre (FIC) is in charge of regulating financial crimes and markets. The FIC is preparing a report that should conclude on the country’s regulatory framework for cryptocurrencies. Crypto policy has been in the works for quite some time, and the government wants to take the necessary measures for self-regulation of the growing sector.
Recently, the South African government launched an investigation into fintech firms to ensure that they are complying with the laws, especially the Anti-Money Laundering Act. The Committee on the Elimination of the Unfair Trade Practices (UCTF) was formed by the Ministry of Finance to investigate the fintech industry and to ensure that domestic laws are being followed.
Summary of the situation – Retailers’ interest in virtual currencies has prompted South African regulators to issue a new national directive on crypto-currencies. – The country’s financial supervisory authorities are gradually working on regulations. South African regulators are paving the way for progressive regulation of virtual currencies with national guidelines. This represents a break with the largely aloof or interventionist approach of the past seven years. The deciding factor here was the very strong retail interest in digital assets in South Africa. In a document published on Friday, the country’s intergovernmental working group on fintech outlined a course of action for the introduction of a regulatory framework aimed at service providers in the cryptocurrency market. This document has been prepared in the context of the Group’s regulation of cryptographic assets.
South Africa has a specific national policy
South Africa’s national policy on virtual currencies has not yet been implemented. In 2014, Treasury issued a public statement on this issue. This statement was made to the country’s financial regulator, the Reserve Bank of South Africa, and to the financial and tax investigation authorities. The tone of the statement was cautious and reserved, but not interventionist, warning the public that they could trade digital assets at their own risk. Moreover, they stated that they would have no legal protection in case of difficulties.
Experts and commentators point to several factors, including the growth of cryptocurrencies in South Africa (over R2 billion – $147 million) in daily exchange value in early 2021. These factors have led to the view that the above policy is not sustainable. The new IFWG document points out that although the regulatory framework is structured and implementation is planned, cryptocurrencies remain highly volatile and risky. Therefore, the potential financial losses from trading activities in cryptocurrencies remain high. Six fundamental principles determine the direction of South Africa’s development. These general principles include adopting an activity-based view to ensure the same activity, same risk principle. Other general principles: align with regulatory decisions, apply risk-adjusted measures, keep pace with international best practices, adopt a collaborative approach to regulating cryptocurrencies, and promote digital financial literacy among consumers.
The new national guideline also contains 25 recommendations for the regulation of virtual currencies, covering three main areas. These areas are the fight against money laundering and terrorist financing, financial sector law enforcement and cross-border financial legislation. Enforcement of financial sector legislation means that the country’s financial regulator will investigate market abuse, such as market abuse and cryptocurrency fraud, to prevent. South Africa has a regulatory environment that is quite similar to the U.S. laws and regulations around cryptocurrency trading. However, the South African crypto market is still relatively small and rather fragmented, which makes it hard to regulate.. Read more about cryptocurrency regulation pdf and let us know what you think.
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