South Africa is set to regulate Bitcoin and other cryptocurrencies as financial assets

South Africa is set to regulate Bitcoin and other cryptocurrencies as financial assets
South Africa is set to regulate Bitcoin and other cryptocurrencies as financial assets

Regulation of cryptocurrencies in South Africa seems to have become a reality and will pave the way for maintaining consistency in cryptocurrencies and Bitcoin assets. The South African Reserve Bank (SARB) is pioneering the regulatory activities that are expected to start next year.

According to the rules, the regulations will treat Bitcoin as a financial asset. This classification claims that investors’ interests will be protected, and more innovation will emerge in the industry.

In accordance with directives for crypto regulations, individuals and companies that intend to offer crypto-related services will comply with established requirements.

They are expected to operate as providers of financial services. They must also comply with the global guidelines of the Financial Action Task Force (FATF). These operators include those who want to offer crypto advice.

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The February 2022 publication of the budget review for the country’s national finance minister had previously indicated measures to classify crypto as financial assets. The state also has plans to improve the reporting and control of crypto transactions. It would maintain compliance with exchange regulations in South Africa through its engagement.

South Africa is still one of the regions with healthy crypto use. There is an increase in the popularity of crypto, especially Bitcoin, in the country. This is due to higher exposure among people, as it registers over six million people with crypto exposure.

South Africa is preparing to regulate Bitcoin and others as financial assets
The BTC price plunges on the daily chart | Source: TradingView.com

Possible processes for Bitcoin and cryptocurrencies

Deputy Governor Kuben Chetty of the South African Reserve Bank gave a message in the process for the regulations. Chetty stated that the introduction of new legislation for the regulation would be in 12 months.

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He stated that the first step is the declaration of crypto as financial assets. Thereafter, the listing of cryptocurrencies will then be planned through the Financial Intelligence Center Act. Other processes will be to create appropriate regulatory structures for crypto exchanges.

The rules will imprint requirements on some levels of KYC (Know Your Customer), tax and control laws for stock exchanges. In addition, crypto exchanges will issue a warning stating the potential risk of losing money through crypto investments.

Furthermore, in her observation, Chetty revealed a change in SARB’s attitude towards the crypto sector over the last decade. The institution has gradually come to terms with cryptocurrencies as financial assets. This was especially contrary to its disposition during the last 5 years, as it did not expect any need for supervision in the regulations.

Chetty also stressed that SARB did not take crypto as its currency. In its classification, digital assets are highly volatile and cannot be used in daily retail payments.

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In addition to its regulatory preparations for cryptocurrency, SARB is moving to launch a digital central bank currency (CBDC). From April 2022, the institution completed the technical proof-of-concept for the CBDC.

Featured image from BBC, chart from TradingView.com

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