CAPE TOWN – The SA Reserve Bank (Sarb) on Wednesday published its views on regulating cryptocurrency through a consultation paper in the country.
The document offers recommendations for policy proposals to industry participants and gives an overview of the perceived risks and benefits associated with crypto-assets which it has made open to comment from the public until 15 February 2019.
This consultation paper is a product of the Intergovernmental FinTech Working Group (IFWG), which includes members from Treasury and Sarb, which was formed to construct recommendations for the regulation of digital assets in South Africa.
Business Report spoke to Marius Reitz, a country manager at Luno, a global cryptocurrency company and he said that Luno fully supports the risk-based and functional approach taken in the Consultation Paper.
Marius Reitz said: "Luno also supports the IFWG’s decision to observe and adhere to international trends in terms of the regulation of crypto assets. We applaud the decision to implement the anti-money laundering/countering the financing of terrorism (AML/CFT) that form part of the recent amendments to the Financial Action Task Force (FATF) Recommendations and that all virtual asset providers register with the Financial Intelligence Centre (FIC). This will help keep out fraudsters and other operators with low concern (or capabilities) to keep customer information and money safe."
In the paper, It states that the regulations proposed have an aim to help monitor the purchasing and selling of cryptocurrency, with a major focus on improving compliance with existing financial security legislation.
The IFWG proposed that all cryptocurrency asset trading platforms, custodial service providers, and payment service providers will be required to register with the IFWG and comply with AML/CFT provisions of the Financial Intelligence Centre Act.
This will include platforms such as Bitcoin exchanges, trading centres, and cryptocurrency ATMs.
The government recommends that cryptocurrency service providers monitor user transactions – especially large transactions which may be linked to terrorist activity and once there is no compliance, administrative sanctions be imposed.
The paper states that South Africa does not currently intend to ban the buying, selling or holding of crypto assets, or to ban crypto assets for payments.
"Regulation will provide consumers or potential consumers with the comfort that the service they are dealing with is held to defined regulatory standards. Imposing regulations will, in turn, enhance general trust in and stability of the market. It may also result in even more talent and investment capital flowing into the industry, unlocking more business models and bringing more advanced products to market," Reitz told Business Report.
Rietz said that they are actively working with a number of central banks and financial regulators, including the Sarb, to drive regulation in the cryptocurrency field.
"Imposing regulations will, in turn, enhance general trust in and stability of the market and ultimately brings clarity to businesses and consumers. It helps keep out fraudsters and other operators with low concern (or capabilities) to keep customer information and money safe," said Reitz.