South Africa’s financial regulator is laying the foundation for a “phased and structured” regulation of cryptocurrencies. The move overturned the basically non-interference approach taken in the past seven years and was driven by the country’s growing interest in cryptocurrency in the retail industry.
In one position paper The country’s Intergovernmental Fintech Working Group (IFWG) released on June 11, with the support of the Crypto Assets Regulatory Working Group, formulated a roadmap to introduce a regulatory framework centered on Crypto Asset Service Providers (CASP).
So far, South Africa’s initial national policy on cryptocurrency has been one of the cautious but non-interfering policies. As early as 2014, the Ministry of Finance and the South African Reserve Bank, as well as the country’s financial regulators, financial intelligence agencies and tax authorities issued public statements on this issue. Its tone is cautious but not intrusive, warning the public that they can trade cryptocurrencies at their own risk and will not receive legal protection or recourse in the event of difficulties.
The commentator pointed out that there are several factors, including the daily transaction value of the South African cryptocurrency market soaring to more than 2 billion rand (147 million US dollars) Earlier this year, Making the previous policy untenable.
The IFWG’s new paper emphasizes that even if a structured regulatory framework will be implemented in stages, crypto assets still “have inherent risks and volatility,” and the potential financial losses from crypto trading activities are still high.
The six general principles will inform the country’s evolving methods. This requires an “activity-based view” to ensure that the principle of “same activity, same risk” guides the decision-making of regulatory agencies; implements measures proportional to risk; adopts a collaborative approach to supervise encrypted assets; keeps pace with international best practices , And encourage consumers to learn about digital finance.
The document also made 25 recommendations on how to supervise encryption in three main areas of focus: anti-money laundering and combating terrorist financing, cross-border financial laws, and the application of financial sector laws. This ultimately means that the task of the South African Financial Sector Conduct Authority is to prevent market abuse, such as fraud and market misconduct, and to take action on the perpetrators of the industry.
In addition to the published papers, IFGW also published a Press release Outline its strategy, which provides space for its concerns about the nature of asset classes and surrounding ecosystems. IFGW pointed out that decentralization is a disadvantage, not an advantage, which prevents consumers and traders from turning to authoritative or centralized entities that can solve user errors (such as using the wrong encrypted wallet address).
IFGW also expressed concern about the manipulative nature of many encrypted marketing materials, asset price fluctuations, and fraudulent activities (such as Ponzi schemes).Indeed, this year The largest Ponzi scheme in the history of the country Involving a company targeting Bitcoin (Bitcoin) Traders, they have accumulated 23,000 BTC from investors a According to reports, there are 26,000 members worldwide.