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FSCA gets the ball rolling on crypto regulation in South Africa

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FSCA gets the ball rolling on crypto regulation in South Africa

The Financial Sector Conduct Authority (FSCA) says the draft regulatory framework for regulating the cryptocurrency industry in South Africa will be finalized “very soon”.

Last month, the South African Reserve Bank (SARB) announcement it was working to introduce a regulatory framework to govern crypto transactions.

The announcement came nearly six years after South Africa’s central bank initially took a stand against regulating the cryptocurrency industry because it is classified as an asset rather than a currency.

After reconsidering its previous position, the SARB noted that it has now reconsidered its position, having taken steps to regulate crypto as a financial asset – an initiative it is embarking on in conjunction with the Task Force. Intergovernmental Forum on FinTech (IFWG).

The IFWG is made up of regulators and policy makers from the fintech industry, including the FSCA, SARB, South African Revenue Authority and the Competition Commission.

Speaking at the recent Money Smart Week SA webinar hosted by the National Treasury, Lyndwill Clarke, Head of Consumer Education at the FSCA, provided an update on the regulatory framework.

“Although we cannot provide a timetable on the finalization of the regulatory framework, what we do know is that the framework will first be submitted for consultation. We are in the process of finalizing it and it will be published for consultation very soon.

SA’s approach to crypto regulation will be conducted in a systematic and phased manner, he noted.

Being published for consultation, comment and feedback from stakeholders in the financial sector, especially those in the crypto industry, will add a lot of value by providing a guideline to the framework, he added.

Lyndwill Clarke, head of consumer education at the Financial Sector Conduct Authority.

Lyndwill Clarke, head of consumer education at the Financial Sector Conduct Authority.

“There are obviously various aspects to the framework, and the publication itself will be a joint publication by the Prudential Authority (financial sector regulator) as well as the FSCA.”

With the crypto space maturing rapidly, regulators around the world are accelerating their efforts to adopt or regulate cryptocurrencies.

Kuben Naidoo, Deputy Governor of the SARB, has previously said that the new crypto regulations will play a key role in ensuring investor protection and confidence by ensuring compliance with anti-money laundering legislation and exchange controls.

“The use of cryptography for money laundering and other illicit activities is cause for concern. 90% of transactions involving cryptocurrencies in the United States involve the purchase of opioids or gambling tokens,” he pointed out at the time.

In just a few years, the adoption of crypto, as well as the entry of new players into the South African market, has exploded.

Over the past 12 years, the global crypto asset ecosystem has grown to include more than 10,000 unique crypto assets, according to the IFWG.

Daily trading values ​​have also increased significantly over the past few years – currently averaging more than $200 billion and exceeding $400 billion on some days, according to the group.

While the crypto hype has led to some exciting developments in redefining ownership and the transfer of value, it also has many negative effects.

Last week, the Prudential Authority published a guidance noticeurging the big four banks to start working with crypto readers.

The guidance notice came after some major local banks shut down the accounts of cryptocurrency exchanges, largely fearing the potential risks they pose.

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