South African stock exchanges hail new ‘crypto is a financial asset’ ruling

0

The Reserve Bank of South Africa is expected to begin regulating cryptocurrencies as financial assets within the next 18 months, with exchanges expecting the move to boost adoption in the country.

The decision to classify cryptocurrencies as financial assets and not currencies has been mooted for some time by the South African Reserve Bank (SARB). Deputy Governor Kuben Chetty confirmed that the new regulations will come into effect next year, speaking in an online chat on Monday.

The cryptocurrency space has been left to grow organically in South Africa, with no clear regulations issued by the SARB until recently. The country has become a leader in cryptocurrency adoption, with over 6 million South Africans estimated to own cryptocurrency.

Now that the SARB has finally taken a stand on the ecosystem, exchanges, traders, and investors can begin to take stock of the ramifications. Cointelegraph reached out to major exchanges operating in the country to gauge the perceived regulatory attitude of the SARB.

Related: Africa’s Top Golfers To Shoot For Bitcoin Prize At Sunshine Tour

Marius Reitz, managing director for Africa at global cryptocurrency exchange Luno, has been a proponent of clear regulatory parameters for the cryptocurrency industry. In correspondence with Cointelegraph, Reitz welcomed the regulatory decision and believes it will create a safer environment for users in the country:

“Crypto-asset service providers (CASPs) will need to obtain FSP licenses and it will be easier for the public to identify a trusted and licensed platform. This will create an entry barrier for these platforms without considering security of funds and customer information.

Reitz said Luno was in a unique position to anticipate regulatory changes in South Africa, given that the company operates in a variety of markets around the world that already have strict regulatory guidelines such as Malaysia and Singapore.

Luno’s managing director for Africa said compliance with the new regulatory parameters would not require a drastic change in its processes outside of country-specific nuances. Luno already performs Know Your Customer (KYC) checks, sanctions checks as well as anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

Reitz also suggested that more exchanges could use proof-of-reserves verification. Although not required by law, Luno has undertaken an audit of its crypto holdings to confirm custody of client assets to provide an additional level of trust to clients.

It’s also business as usual for VALR, another South African cryptocurrency exchange that has quickly become a trusted platform for local crypto traders and users. CEO Farzam Ehsani told Cointelegraph that the company already behaves like a regulated entity, adopting KYC controls and a risk management and compliance program.

VALR has also implemented AML and CTF policies and worked with authorities to combat illicit movement of funds. Ehsani was convinced that developing regulations for the space would not lead to stifling controls, with the industry to fall under the responsibility of the Financial Intelligence Center:

“VALR is already registered with the Financial Intelligence Center and we have worked with the FIC for many years, so any formal regulatory framework in this regard will only formalize what VALR already has in place.”

The SARB continues to explore the possible use of a central bank digital currency (CBDC) as part of its Project Khokha initiative. A number of prominent players in the traditional banking industry in South Africa have been actively involved in testing a proof of concept for the proposed CBDC settlement system.

Share.

Comments are closed.