Officials from South Africa’s central bank pointed out that they intend to classify and identify cryptocurrencies as “financial assets” for supervision. New regulations are expected to be introduced in the next 12 months, while protecting investors and encouraging innovation and development.
According to research by cryptocurrency exchange Luno, South Africa has widespread cryptocurrency usage, with an estimated 13% of the population owning some form of cryptocurrency, and more than 6 million people are exposed to cryptocurrencies, so the regulation of cryptocurrencies has always been is a topic of concern.
In February this year, South Africa’s National Treasury revealed in a budget review document that cryptocurrencies are expected to be recognized as financial products and that it plans to increase monitoring and reporting of cryptocurrency transactions aimed at protecting consumers.
Now, Kuben Chetty, deputy governor of South Africa’s central bank, the Reserve Bank of South Africa, recently confirmed that new regulations on cryptocurrencies will be introduced in the next 12 months.
Kuben Chetty pointed out that the South African Reserve Bank will first officially declare cryptocurrencies as a financial asset, and through amendments to the Financial Intelligence Centre (FICA) Act, will bring cryptocurrency service providers into the scope of accountability agencies, and will then formulate regulations for exchanges Framework, which includes implementing real-name customer (KYC) measures and meeting requirements such as tax and foreign exchange control laws. In addition, exchanges are required to issue “health warnings” to emphasize the risk of loss to users.
Kuben Chetty mentioned that the South African Reserve Bank’s attitude towards the cryptocurrency industry has changed dramatically over the past 10 years. About five years ago, the agency saw no need for any regulation and oversight of cryptocurrencies, but with the growing interest in cryptocurrencies in recent years, the need for regulation has become more apparent, he said:
By any definition, a cryptocurrency is not a currency, but an asset. This is something that can be traded, something that is created. Some cryptocurrencies are backed and secured by assets, but some do not. Some cryptocurrencies may have real foundations, real economic activity.
Kuben Chetty emphasized that the South African Reserve Bank does not consider cryptocurrencies as a form of money because cryptocurrencies are highly volatile and difficult to use for everyday retail.