An increase in crypto trading has prompted regulators in South Africa (SA) to review national policy on digital assets. Financial regulators in South Africa are laying the foundation for “phased and structured” rules guarding cryptocurrencies in the country. This move represents a complete turnaround from the laid-back attitude that has been adopted by authorities for the past seven years.
In a recent report, SA’s Intergovernmental Fintech Working Group (IFWG), backed by Crypto Assets Regulatory (CAR) Working Group (WG), has introduced a thought-out plan. The plan is to bring forth the regulatory groundwork that will focus on digital asset service providers. It was agreed that the cryptocurrencies could not stay out of the country’s regulatory scope. Hence, the regulators recommended that “South Africa employs a staged approach to bring crypto assets within the regulatory remit through the regulation of crypto assets service providers(CASPs).”
To this effect, Members of the IFWG agreed on sis principles to regulate CASPs. They include appropriate regulation, a neutral stance among South African regulatory authorities, and a risk-based method towards cryptocurrencies. Others include collaboration on policies and regulations, actively monitoring the digital assets market, and finally, an increase in financial literacy.
The report also stated that even though rules are being introduced to guide crypto trading, it does not change the notion that digital assets are generally risky and volatile. The report added that crypto trading activities have the potential to result in extreme financial losses.
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