Growing interest of retail investors in cryptocurrencies has made the regulators of South Africa reconsider their policy regarding cryptocurrency. Therefore, financial regulators of South Africa are working on cryptocurrency regulation. Their move represents an inversion of the approach where the decision making was not into individual’s own hands i.e., hands-off approach carried for as long as 7 years, and this has been propelled by progressively undeniable degrees of crypto’s interest of retail countrywide.
The national policy of South Africa that was planned initially is now alarming yet it is non-interference. National Treasury, previously in the year 2014, issued a statement which was devoted to the matter along with the South African Reserve Bank, the country’s regulators, monetary intelligence, and agencies regarding tax. The tone of the statement was preventative however unintrusive, cautioning the people that they should exchange crypto at their peril, and they would be provided with no legitimate assurance if there is any occurrence of challenges.
Furthermore, pundits have noticed that few components, including the crypto market’s flood to more than 147 million dollars in day-by-day exchanged worth recently, have delivered this previous policy illogical. Additionally, a new paper presented by IFWG portrays that although a regulated system will be phasing in, the assets of the crypto will still involve risk and stay volatile, and predicted losses suffered by activities regarding the trading of crypto will still stay high.
Moreover, six comprehensive principles will let us know about the developing approach of the country. This involves taking the perspective which is based on activities to make sure that the principle of “same activity and same risk” tailors the decisions made by the regulators; implementing the measures that are directly proportional to danger or risk; using an approach that is collaborative to asset’s regulation of the crypto; staying in touch with the knowledge of international practices that are best and promoting digital platforms and financial literacy amongst the clients.
Lastly, the following paper likewise proposes 25 proposals concerning the regulation of the crypto with regards to three key areas that being, AML, laws of cross-border regarding finance, and application involving the laws in sectors of finance. This suggests that the FSCA of South Africa will be assigned a task to avoid abuses in the market, for instance, fraud.