As part of a series of amendments to South African financial laws, crypto-asset service providers have turned into responsible institutions. The South African treasury announced further crypto regulations “to be finalized during 2022.”
The announcement implies that the proposed changes will ensure that, “any person who provides advice or brokerage services related to crypto-assets must be recognized as a provider of financial services under the law and must comply with the requirements of the law.”
Two Contrasting Experts
This issue has caused contrasting opinions from the experts. For example, Marius Reitz, the general manager of crypto platform Luno for South Africa, shed light on the changes, commenting that, “crypto players believe they welcome regulation,” further adding that, “regulation is a vital part of the cryptocurrency ecosystem.”
Reitz told Cointelegraph, “The regulation will make it easier for the public to distinguish between licensed and unlicensed crypto service providers and find a safe place to store and buy their crypto.”
However, for Hermann Viver, the founder of Bitcoin Ekasi, a South African project inspired by Bitcoin Beach, it is a different story. He told Cointelegraph that, “Stricter KYC and AML rules push already marginalized people further to the fringes of society. And, ultimately, “authorities can address the situation with a one-size-fits-all solution, which for many, turns out to be no solution at all.” absolute solution.”
Vivier told Cointelegraph, “Ideally, there should be a threshold where people earning below a certain level don’t require compliance/verification, because really, if, for example, that threshold was $330/month, what possible harm can a person do with that amount?”
The South-African Authorities’ Position
South African authorities have previously warned big players like Binance not to operate in the country. Elsewhere, Unathi Kamlana, the commissioner of the South African Financial Sector Conduct Authority, spoke out on protecting vulnerable crypto investors.
In other developments, the Treasury report alludes to “risks posed by so-called stablecoins,” which will be addressed later this year. In southern Africa, plans for central bank digital currencies (CBDCs) are public and widely debated. Ultimately, a CBDC is a way for governments to manage money flows more effectively, in contrast to private stablecoins like Tether (USDT).
The Treasury’s decision to tighten “money laundering and terrorism risk financing controls through crypto-assets” comes as no surprise to Bitcoin Ekasi and other members of the South African cryptocurrency industry.
It is worth noting that in June last year, the South African Intergovernmental Fintech Working Group (IFWG), under the aegis of the Crypto Assets Regulatory Working Group, laid out a roadmap for introducing a regulatory framework that will center on crypto asset service providers. This happened because of the country’s change in its initial national policy toward crypto, characterized as one of wariness but also noninterference
Since then, IFGW remains concerned about the manipulative nature of much crypto marketing material, assets’ price volatility, and fraud activities.
Some Conclusions from the Experts
For Luno, “a notable aspect of the SA Reserve Bank’s approach is to include the industry in its discussions from the beginning.” The situation for Reitz is clear, stating, “The regulation will also boost the number of formal partnerships between banks and cryptocurrency companies, which will facilitate greater adoption of cryptocurrencies.”
Reitz is convinced that South Africa may “see more CBDCS launch in 2022” as South Africa is “investigating a digital currency”. The CBDC could provide a “comfortable space for regulators”.
By Audy Castaneda
