The Deputy Governor of the South African Reserve Bank (SARB) recently said that the institution has changed its position on cryptocurrency and now considers it a financial asset to be regulated as such. SARB plans to have a regulatory framework for cryptocurrency in place by the end of 2023.
A more secure crypto ecosystem
SARB Deputy Governor Kuben Naidoo recently said that the institution has revised its position on cryptocurrencies and is now seeking to introduce a framework that governs crypto-related transactions. Naidoo, a member of the SARB’s Monetary Policy Committee, said such a framework would create a more secure cryptoecosystem.
As explained in a report, when such a regulatory regime enters into force, South African crypto-investors – who have become accustomed to crypto-fraud – will be protected by law. SARB expects to have such a regulatory regime in place within 12 to 18 months.
Meanwhile, Naidoo, speaking at a webinar hosted by PSG Konsult, is quoted in the report, highlighting one of the main reasons why the central bank changed its mind. He said:
Our point of view has changed and we are now considering [cryptocurrency] as a financial asset and we hope to be able to regulate it as a financial asset. A lot of money has flowed in and it needs to be regulated and generalized.
Cryptocurrencies to comply with currency control laws
However, the Deputy Governor insisted that the central bank’s intention is not to select winners or losers, but to ensure that “investors receive a health warning and protected investors”. Naidoo argued that the use of cryptography in money laundering and other illegal activities is a cause for concern to be resolved, hence SARB’s change of attitude.
On crypto exchanges, Naidoo said: “[They] should comply with currency control laws, such as the rules on combating money laundering and terrorist financing. They should also comply with the rules of foreign exchange contracts in the same way that people who trade in any currency and trade across borders are subject to these laws.
When asked if the central bank had taken too long to make this decision regarding cryptocurrencies, Naidoo insisted that his institution have the same approach as its counterparts in Australia, Singapore and the UK.
“We are keeping a close eye on them, and I do not think we are lagging behind in the virtual currency curve. Most central banks are focused on two things: regulating the broader cryptocurrency environment and, secondly, learning from it to see how they can take advantage of some of these lessons, ”Naidoo added.
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