South Africa appears to be the latest on a list of countries that are considering regulation of cryptocurrencies, as according to an official document, they are currently laying the groundwork for a “phased and structured” process.
From one specific point of view, this comes as a surprise, as the African nation has been a fan of a hands-off approach regarding crypto, while the retail interest in the region kept growing.
A roadmap has been developed
An official position paper has been published on Friday by South Africa’s intergovernmental Fintech Working Group, under the aegis of the Crypto Assets Regulatory Working Group, presenting what was called the “roadmap for introducing a regulatory framework”, focused on crypto asset service providers.
As stated above, the country was cautious towards cryptocurrencies ever since 2014, warning the public, through a public statement issued by both the South African Reserve Bank and the country’s financial regulator, that trading crypto should be done at each’s own risk. Also, no legal protection in case of difficulties was offered at the time.
What led to a change of mind?
Several commentators and financial analysts believe that there were several factors behind this decision, including the crypto market surge in South Africa, which reached $147 million in daily traded value, earlier in 2021.
The Intergovernmental Fintech Working Group emphasizes that despite a structured regulatory framework being phased in, digital assets will still remain “inherently risky and volatile”, while the potential losses remain high as well.
The final form of the paper will be built around six principles, informing about South Africa’s evolving approach on crypto, entailing taking an “activities-based perspectives”, but also detail on all the upcoming measures, implemented to avoid major risks.
Finally, we’re looking forward to seeing a complete list of recommendations on regulating cryptocurrency, in relation to anti-money laundering and combating the financing of terrorism, cross-border financial laws, and, finally, the application of financial sector laws.