South Africa’s Reserve Bank (SARB) has taken a step forward in forming regulation for the crypto space, releasing a consultation paper that discusses tax policy enforcement, de-anonymization, and other laws that would allow more control over crypto assets.
The paper gives a general overview of how they approached crypto assets. One section speaks of how crypto and fintech could affect the nation:
Crypto assets are considered to be an innovation that could materially impact financial services, as some view crypto assets as a new form of money that has a direct impact on economic activities such as payments, investments and capital raising, among other things.
Investor protection is often the primary reason for authorities to propose regulations for crypto, and South Africa is no different. Authorities are concerned that the market’s volatility, penchant for fraud, and vulnerability to hacking may be detrimental to consumers.
Be that as it may, sometimes such regulation can worry investors, though nothing is set in stone with regards to the SARB’s suggestions. Regulation that is not “thoughtful,” as crypto investors often wish for, may stifle innovation. It appears that the country’s authorities are aware of the fact that blockchain could bolster banking capabilities and boost the economy.
That said, these are only suggestions for the space, and investors ought to be glad that the government is acknowledging cryptocurrency assets. It has also specifically stated that it does not intend to band cryptocurrencies, an investor concern in some nations, like India. The paper specifically deals with e-wallets and other crypto services, and their registration with the government.
Registration appears to be a key focus for the SARB, who expect both crypto service providers and crypto payment providers to register. The primary purpose of this is to prevent money laundering. This would make it possible for banks to know crypto users’ wallet addresses.
On the whole, investors can now at least take comfort in the fact that nations across the world are seriously examining the crypto space, even if the regulation is not as laissez-faire as they might like it.
Like the United States Securities and Exchange Commission (SEC), the SARB is open to public comments on the paper, and has a set of deadline of February 15 for responses on the suggestions.