South Africa to regulate Cryptocurrency market

SOUTH Africa will begin the regulation of cryptocurrency trading very soon.

The country’s financial regulator yesterday announced its intention to bring the cryptocurrency market under its oversight in a paper from the Intergovernmental Fintech Working Group (IFWG) with support from the Financial Sector Conduct Authority (FSCA).

According to the paper, South Africa, home to 59 million people, will start to regulate crypto assets “in a phased and structured approach.”

The position paper of the IFWG made 25 recommendations and outlined what they think is the best approach for the creation of a regulatory framework. It also highlights the need for better financial literacy for consumers as the retail interest in digital currency grows.

It also highlighted that the recent Ponzi scheme of a Bitcoin trader late last year and other cases of market abuse has brought about the need for tighter rules around the cryptocurrency market in the country.

“Crypto assets will be brought into the South African regulatory purview in a phased and structured manner. It is, however, reiterated that with or without regulation, crypto assets remain inherently risky and volatile.” the IFWG stated.

The paper is expected to guide regulators and provide them with the required tools to begin implementation as recommended in the paper.

The IFWG further stated that “the dynamic development of the crypto market must continue to be pro-actively monitored, including maintaining knowledge on emerging international best practices through standard-setting bodies.”

Recall that South Africa is also amongst the countries looking into the possibility of a Central Bank Digital Currency (CBDC).  China, Nigeria, Ghana and some other countries have expressed the same intention.

The South African Reserve Bank had mentioned last month that it is currently looking into creating its own CBDC as an electronic legal tender for general-purpose retail use.