The South African government is considering the Intergovernmental Fintech Working Group’s (IFWG) proposition of regulating cryptocurrency through the implementation of three new rules.
With cryptocurrency becoming more entrenched in the country, here are the three rules that IFWG proposes:
1. Crypto asset service providers should be held as accountable institutions within the Financial Intelligence Centre Act (2001).
This will assist with concerns about money laundering and terrorism risk financing through crypto assets and align the act to the standards set by the Financial Action Task Force (FATF) for virtual assets and related service providers.
2. Crypto assets should be declared a financial product under the Financial Advisory and Intermediary Services Act (2002) to protect consumers.
Under this declaration, any person providing advice or intermediary services related to crypto assets must be recognised as a financial services provider under the act and must comply with the act’s requirements.
3. Improve the monitoring and reporting of crypto asset transactions to comply with the Exchange Control Regulations of 1961.
According to the IFWG, one of the most important reasons why crypto assets are challenging to regulate is because they operate at a global level and could potentially be classified under various economic functions.
“Responsibility for regulation often cuts across various regulators and national jurisdictions. The danger of a fragmented international regulatory approach is that crypto activities potentially migrate towards jurisdictions that are regulated less stringently in a ‘race to the bottom’ as crypto assets are borderless,” said the organisation.
The IFWG said a co-ordinated global approach was vital because crypto assets were without borders, and their anonymous nature increased the difficulty of implementing the correct regulatory and monitoring tools.
According to data from Luno, the most popular crypto coins in South Africa are Bitcoin, Ethereum, and XRP.
The data also revealed that more men are buying crypto than women, with those that are starting out depositing R450 for a purchase.
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