South Africa to regulate crypto as a financial asset
The central bank governor stated that crypto assets would officially be recognised as a financial asset in South Africa within 12 months
By Shashank Bhardwaj
Kuben Naidoo, the Deputy Governor of South Africa Reserve Bank (SARB), announced that SARB plans to adopt legislation next year that would classify and regulate cryptos as financial assets to balance investor safety and innovation.
The announcement came during a webinar held on June 12, where Naidoo shared the news and also shared that the regulations will most likely be released within the next twelve months and will not recognise cryptos as a payment method but as a financial instrument that may also be used in the mainstream sector.
He added, "We are not intent on regulating it as a currency as you can't walk into a shop and use it to buy something. Instead, our view has changed to regulating (cryptos) as financial assets. There is a need to regulate and bring it into the mainstream, but in a way that balances the hype and with the investor protection that needs to be there."
Naidoo, while continuing with the discussion about crypto regulation, said that aside from all of the excitement that surrounds crypto, central banks around the globe are examining and working on understanding the industry to determine what kind of benefits it may bring with it to the financial system in addition to ongoing regulation initiatives.
Furthermore, Naidoo also stated that some crypto assets bring significant technology improvements that can enhance many industries, such as payment.
As the concept of incorporating crypto into the mainstream sector becomes more and more accepted, SARB and other financial institutions have started the journey to revise the country's legislation to include crypto assets officially. For instance, the South African Treasury decided to designate crypto as a financial product in February 2022, and it was formally included in South Africa's National Treasury budget review.
In March, it was also announced that additional crypto regulations could be finalised by 2022. To comply with the country's exchange legislation, the state also intends to improve the monitoring and reporting of Bitcoin transactions.
These regulations hold a lot of significance because they will allow the industry to be properly monitored for various cyber crimes such as money laundering, tax evasion, and terror financing, all of which have recently become more and more common due to crypto and blockchains' decentralised nature.
Through the analysis of statistics taken from the global exchange platform Luno, it was found that crypto has a fairly good reputation in South Africa and is actively used in the country. Over 13 percent of the population is believed to own some form of crypto. With over six million people in the country introduced to the crypto marketplace, crypto regulation has long been under discussion.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash