According to reports coming from South Africa, the country’s reserve bank is aiming to introduce a new set of rules regarding the use of cryptocurrencies. The intention is, per the South African Reserve Bank (Sarb) deputy governor Kuben Naidoo, to successfully implement the regulations starting next year, in the first quarter.
The primary goal of the new regulations is to prevent them from being used for malicious purposes, such as currency controls evasion. The fact that the rules are set to be implemented next year will put an end to consultations that started back in 2014.
The information has not been confirmed by an official channel as of the moment of writing this article. But that has not stopped banks and other financial institutions from banning digital currency firms. For example, FNB decided to close every business banking account from firms that deal with crypto.
A “Prudent Course of Action”
“FNB considers this to be a prudent course of action following a comprehensive review of the potential risks currently associated with these entities, particularly given that appropriate regulatory frameworks are not yet in place,” the bank said in a statement.
AltCoinTrader, which happens to be one of the most prominent cryptocurrency exchanges in the African nation, did not hide its disappointment following FNB’s determination; it has been working alongside the financial institution for four years now.
“We are disappointed that a financial institution would succumb to international pressure like this, with banking services being denied to individuals and industry players around the globe,” were the words of AltCoinTrader chief executive Richard de Sousa said.
The South African Reserve Bank refers to currency control as a means to restrict the amount of local currency that is sent outside the nation. The country is known for the limitations of money that its citizens can transfer to other locations.
They can send up to R1 million without declaring it. If they apply through the South African Revenue Service, they can send a maximum of R10 million to other nations with foreign investment in mind.
The R11 million limit may be enough for most South Africans, but high-net-worth people looking to fend off the rand’s devaluation are going to have to get creative while looking for ways to send their assets across the border.
Crypto, the Easiest and Best Protection
The easiest way to achieve that is with cryptocurrencies, and the most popular as well. Most digital assets are of borderless nature. That is why this particular report has been so controversial in South Africa, especially in the crypto and blockchain communities. The Sarb’s intention to establish the new rules can greatly affect local investors.
SA Crypto, arguably the country’s most prominent blockchain community, issued a statement in which it prompted the Sarb to take a more progressive approach when dealing with digital assets. It stated that such a conservative stance could hinder innovation and scare off investors.
“The implications of the Sarb clamping down on cryptocurrency use for the purpose of stricter capital controls are far-reaching and alarming. With a market cap of $210 billion (R3.07 trillion) in the cryptocurrency market alone, the industry is driving significant economic growth in countries adopting such progressive regulation, due to the investment many blockchain and crypto-asset companies are attracting worldwide,” it said.
By Andres Chavez