Key takeaways:
- In a reversal of its prior position, South Africa’s Central Bank [SARB] has opted to include cryptocurrency within its regulatory jurisdiction.
- The apex bank has changed its mind about regulating cryptocurrency as a financial instrument.
- The main objective of the SARB is anti-money-laundering regulations.
In a complete turnaround of its previous policy that left digital assets outside the purview of a legal framework, South Africa’s Central Bank [SARB] has opted to include cryptocurrencies into its regulatory jurisdiction. The top bank has changed its mind about regulating cryptocurrencies as financial assets and is evaluating doing so.
The SARB’s main focus is on the Effective implementation of a regulatory framework that guarantees the observance of anti-money-laundering laws and exchange controls.
The deputy governor of the SARB, Kuben Naidoo, made this statement during a webinar titled “The Future of Money, Banking, and Crypto” that was hosted by the financial services company PSG Konsult.
Naidoo chairs the financial stability and currency cluster, which includes the SARB’s economic figures division, national payment system division, fintech unit, financial stability division, and risk management and compliance division. Naidoo is a member of the SARB’s monetary policy committee.
In 12 to 18 months, the SARB hopes to have such a legal framework and supervisory system in place, that is to safeguard South African citizens exposed to scams by the law.
Kuben Naidoo, the deputy governor of the SARB, said during a webinar:
Our perspective has evolved, and we now see cryptocurrency as a financial asset that has to be regulated as such. There has been a lot of money coming in, and it needs to be regulated and integrated into society.
The South African central bank had no intention of regulating the crypto industry over six years ago because it is regarded as an asset rather than a currency, he continued. Clear definitions of what cryptocurrency is are essential from a regulatory standpoint since they directly affect how it is classified and the consequent regulatory treatment that follows.
Naidoo noted that the majority of central banks around the world took the time to study and observe the industry before making regulatory judgments in response to the question of whether the change of heart was too late.
“We follow the majority of central banks’ and regulators’ practices very closely, as well as the practices of advanced economies like the UK, Singapore, and Australia.”
A large number of central banks from around the world have stepped forward to endorse cryptocurrencies. Recently, the chairman of the National Bank of Kazakhstan stated that the bank intended to leverage the potential of cryptocurrencies, whilst the Russian government is now considering allowing the use of cryptocurrencies for international payments.
Unlike other central banks, Naidoo is interested in two things: first, regulating the overall crypto ecosystem, and second, acquiring knowledge from it to see how it can apply some of those learning. Naidoo added that the structural approach taken by SA to the regulation of cryptocurrencies will be carried out in a methodical and progressive manner that strikes a balance between the enthusiasm and hype around it and the need for investor protection.
