RESERVE BANK PUBLISHES A WIDE RANGE OF CRYPTO ASSET REGULATIONS

CRYPTOCURRENCIES in South Africa could soon be facing strict regulations and be expected to comply with a range of policy directives if the South African Reserve Bank (SARB) has its way. The SARB’s Crypto Assets Regulatory Working Group yesterday published a new position paper for a revised policy and regulatory position on crypto asset activities as they currently operate within a regulatory void. The position paper details a list of 30 recommendations aimed to mitigate the generic risks posed by crypto assets and protect consumers. The paper argues that crypto assets and the various activities associated with this innovation can no longer remain outside of the regulatory perimeter. As a result, the paper said clear policy stances on the variety of emerging use cases of cryptocurrencies must be taken in order to deepen regulatory certainty. “Such policy stances should enable the development of a regulatory framework, including suggestions on the required regulatory changes to be implemented,” it said. “As some risks have already materialised, a revised policy stance needs to be taken, and the South African authorities need to adopt an appropriate regulatory response to mitigate such risks.” The position paper focuses exclusively on non-government, or non-central-bank-issued, crypto assets. It does not address central-bank-issued digital currencies, including central-bank crypto currencies. In South Africa, there are 12 different crypto asset trading platforms, with a market capitalisation value of R6.5 billion. The position paper looks to enforce regulations so far as the functionality of cryptocurrencies for purchasing and selling, making payments, capital raising through initial coin offering, crypto asset funds and derivatives, and market support. SA’s largest cryptocurrency exchange Luno applauded the SARB for releasing their latest position paper, saying it was one of the handful of central banks in Africa working on regulations for the cryptocurrency industry. The SARB said a complete list of the crypto asset trading platforms operating in South Africa will be pursued. The position paper is available for public comment until May 15, 2020.