- The cryptocurrency has been declared a financial product by the South African financial watchdog.
- The South African government is also considering applying currency controls to crypto and license traders operating in the country.
- The Reserve Bank of South Africa has made it clear that regulations will come sooner rather than later.
It looks like we are getting closer to full cryptocurrency regulation and adoption in South Africa.
On Wednesday evening, the Financial Sector Conduct Authority (FSCA), the public financial watchdog, announced that it had classified cryptocurrency assets as financial products, making room for digital tokens to be regulated in the country. .
The proclamation was published in a notice published in the official gazette titled “Declaration of a crypto asset as a financial product under the Financial Advisory and Intermediary Services Act”.
Although brief, the notice also elaborates on the government’s future plans regarding cryptocurrencies, including applying exchange controls to tokens and licensing crypto trading firms operating in South Africa like Luno. and Binance.
Cryptocurrency, blockchain-enabled digital currency products, have long been reviled and praised in equal measure. Initially theorized by the mysterious Satoshi Nakamoto in a white paper describing the creation of Bitcoin, the first digital token, cryptocurrencies have become a modern mainstay of finance.
Due to its completely decentralized nature, countries around the world have been racking their brains on how to regulate virtual money and adopt it to their advantage. In Africa, the adoption of cryptography has been another breakthrough technology.
Last year, Nigeria launched the continent’s first central bank digital currency in eNaira. However, adoption by ordinary citizens has been slower than expected by the country’s federal government.
Earlier this year, the Central African Republic announced that it was the second country on Earth after El Salvador to adopt bitcoin as legal tender.
At the national level, the South African Reserve Bank (SARB) has been planning regulatory measures for cryptocurrencies since 2020. In May, SARB Deputy Governor Kuben Naidoo told Reuters that crypto regulation could come into effect in nine to 15 months.
The SARB apparently wants to limit theft, money laundering and undermining of existing monetary policy through regulation and that an unregulated ubiquitous token could “weaken central bank authority.”
With around 10% of adults in South Africa reportedly owning some form of cryptocurrency, the sooner regulation kicks in, the better for the SARB. Expect other major financial institutions to start offering crypto products in the near future.
[Image – André François McKenzie on Unsplash]