Local experts warn that updated crypto legislation in South Africa could encourage collaborations while potentially marginalizing people who need it the most.
Crypto-asset service providers will become accountable entities as part of a series of revisions to South Africa’s financial regulations. Further crypto laws are expected to be finalized in 2022, according to a study from the South African Treasury.
In a nutshell, the proposed revisions would compel “any person offering advisory or intermediary services relating to crypto assets to be recognized as a financial services provider under the act and to comply with the act’s criteria.””
Marius Reitz, the Luno crypto platform’s South African general manager, explained the adjustments, saying that “trusted crypto players welcome regulation,” and that “regulation is a key element of the cryptocurrency ecosystem.”
In an interview, Reitz stated:
“Regulation will make it easier for the public to discern between licensed and unlicensed crypto service providers and locate a secure location to store and buy their cryptocurrency,” says the author.
It’s a different tale for Hermann Viver, the founder of Bitcoin Ekasi, a South African Bitcoin Beach-inspired project. They claimed that sharper was better “KYC and AML regulations push people who are already on the fringes of society even further. Finally, “authorities tend to address the situation with a one-size-fits-all solution, which for many turns out not to be a solution at all,” according to the report.
In an interview, Vivier stated:
“Ideally, there should be a barrier below which persons earning less than a certain amount require no compliance/verification, because what possible harm can a person do with R5,000 a month [$330]?” says the author.
Nonetheless, Bitcoin Ekasi and other members of the South African cryptocurrency market are unsurprised by the Treasury’s intention to tighten “money laundering and terror risk funding controls through crypto assets.”
Large players like Binance have previously been cautioned not to operate in South Africa by South African authorities. Unathi Kamlana, the commissioner of South Africa’s Financial Sector Conduct Authority, was also outspoken about the need to protect vulnerable crypto investors.
“A remarkable component of the SA Reserve Bank’s approach,” Luno says, “is that it includes industry in its conversations from the start.” Reitz’s situation is straightforward:
“Regulation will also increase the number of official relationships between banks and cryptocurrency startups, facilitating broader crypto adoption,” says the report.
In other news, the Treasury study mentions “risks posed by so-called stablecoins,” which will be discussed later this year. Plans for central bank digital currencies (CBDCs) are public and widely discussed throughout Southern Africa. In contrast to private stablecoins like Tether, a CBDC is a mechanism for governments to better monitor money flows (USDT).
Reitz believes that in 2022, South Africa would “see the debut of more CBDCS,” as the country is “investigating a digital currency.” The CBDC could serve as a “safe haven for regulators.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.