Reserve Bank to regulate crypto currencies
In the next 12 to 18 months, South Africans may be able to buy and sell listed crypto currencies on local exchanges, in a completely regulated environment, according to a Fin24 report.
Initially, the SA Reserve Bank's (SARB’s) stance was that it would ‘look’ at crypto currency developments, but it would not get involved. But given the vast level of transactions that South Africans are doing in a completely unregulated space, the bank has realised it is better to bring crypto currency under its regulation.
‘We now do regard it as a financial asset. And we hope to regulate it as a financial asset,’ said SARB Deputy Governor Kuben Naidoo.
The first thing it wants to do is declare crypto currency as a financial product – crypto currencies would thus be listed under the Financial Intelligence Centre and monitored for money laundering, tax evasion, and terrorist financing activities.
After that, the central bank wants to develop a regulatory framework for the exchanges in SA so that crypto currencies can be listed there.
Naidoo said the framework would include basic 'know your customer' rules and exchange control regulations.
The SARB is also making steady progress in its investigations around a central bank digital currency, according to Naidoo.
A report on the BusinessTech site notes that Naidoo said the bank is intimately involved with ‘Project Dunbar’ – an initiative that brings together the Reserve Bank of Australia, the Central Bank of Malaysia, the Monetary Authority of Singapore and the SARB for a cross border central bank digital currency.
He said the aim of the currency is to improve the efficiency of the local payment system – bringing down costs and the time that it takes to clear and settle in the system. He predicts that a central bank digital currency would most likely be used for cross-border payments, either for goods and services or payments, but will take several years before it becomes a reality.
The SARB has previously tested a digital currency for local use as part of its Project Khoka programme, which looked at using blockchain technology to speed up payment systems in the country.
The rapid growth of crypto currencies poses a potential threat to existing monetary regimes and adding urgency to debates on handling cross-border money transfers.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
