Reserve Bank of South Africa Releases Consultation Report on Regulation of Crypto
“Toughen up the regulation, we won’t ban cryptocurrencies”
The cryptocurrency landscape is transforming rapidly across Africa. The central banks and financial regulatory bodies are evolving with the technology to create safe and functional laws that will not stifle innovation in the blockchain field. The Reserve Bank of South Africa is the latest regulator that has called for progressive regulations to be placed to promote secure development and adoption of cryptocurrencies.
The consultation paper released by the Reserve Bank further called on the public to contribute and review the paper. The public has been offered a month, till February 15th to review the draft paper on future fintech regulation.
The Reserve Bank Consultation Paper
The paper was created by the Intergovernmental FinTech Working Group (IFWG) in conjunction with the Treasury and Reserve Bank’s delegates. In the report offered by IFWG, regulation is a key factor to be considered as the field of cryptocurrency evolves and grows. The report further highlighted that the first quarter of 2019 will offer policy instruments on the future regulation of the industry. The report wrote,
“Upon conclusion of the consultation phase, the regulatory authorities will specify the way forward through a policy instrument such as a guidance note or position paper aimed for the first quarter of 2019.”
The Purpose Of The IFWG Consultation Paper
The purpose and scope of the Consultation paper on the regulation of cryptocurrencies outlined three key points:
- To provide an overview of the perceived risks and benefits associated with cryptocurrencies.
- Introduce progressive regulations for the field.
- Present policy proposals to the industry participants and stakeholders.
Furthermore, the paper stated the proposed purpose of the regulations is to keep in check non-governmental issued cryptocurrencies. In the case of government-issued cryptos, the Reserve Bank will create new regulations. This opened a conversation on whether the Reserve Bank is looking forward to issuing cryptocurrencies to its citizens.
The cryptocurrency field has seen massive appreciation in Africa in the past year. However, the rise in popularity of the digital assets has caused scams to increase as well. The IFWG outlined in the paper that regulations on anti-money laundering (AML) and combating financial terrorism (CFT) will greatly reduce the prevalence of these scams.
However, the commission does not intend to completely ban cryptocurrencies but rather place regulations on AML/CFT to ensure illegal activities do not take root in the country.