- South Africa is preparing for a crackdown on anonymous crypto assets which could affect bitcoin investors
- South African Reserve Bank or SARB published a consultation paper regarding the regulation of digital tokens
- They encourage crypto-asset service providers to register to make it easier to track transactions and investments
The South African Reserve Bank or SARB is about to publish a policy paper on the crypto industry. New regulation is expected to come in the first quarter of this year, and e-wallet and other service providers could be required to register with the government.
In the name of protection
Behind these registrations is their goal to ‘protect users and investors of cryptocurrencies’. It is also intended to help the authorities so it will be easier for them to enforce taxes and other laws when it comes to crypto assets. Moreover, banks do not consider crypto-assets as currencies. Therefore, the authorities are still having a hard time levying taxes on them and enforcing laws. This will also remove the anonymity in bitcoin transactions. As a result, service providers will be more responsible in tracking activities of the digital token holders.
SARB has also published a consultation paper this week regarding the regulation of digital tokens as part of an Intergovernmental FinTech Working Group or IFGW. This includes the National Treasury, the Financial Sector Conduct Authority (FSCA), the SA Revenue Service (Sars), and Financial Intelligence Centre (FIC).
IFGW agrees with the fact that crypto assets are an important fintech innovation. However, they are concerned about the protection of investors, especially considering the increased fraud, volatility, risks, and hacking incidents in the industry.
Stringent money laundering regulations
Considering that crypto-assets could perform similar functions as those of securities and commodities, South Africa has no plans to ban their trade. However, they emphasized the need to monitor the unregulated sector.
IFGW suggests to set regulations in order to protect crypto-assets investors. This proposal will help digital authorities to keep an eye on decentralised digital tokens. It includes subjecting crypto-asset service providers to registration. As a result, these providers could have the authority and designation similar to other licensed and registered crypto asset service providers which are already operating in South Africa.
IFGW’s registration requirement will apply even to crypto-asset payment providers such as Luno and other entities that offer software enabling the storage of crypto-assets.
All crypto-asset providers are required to obey with anti-money laundering rules and would also have to monitor and report suspicious transactions.