Recently, the South African Reserve Bank’s deputy governor stated that the bank has changed its position regarding cryptocurrency and now considers it a financial asset that must be regulated. The SARB anticipates having a cryptocurrency regulatory framework in place before the end of 2023.
Kuben Naidoo (SARB’s deputy governor) recently stated that the institution has rewritten its position on cryptocurrency and is looking to establish a framework for crypto-related transactions. Naidoo is a member the SARB’s Monetary Policy Committee and said that such a framework would create a safer crypto environment.
According to one report South African crypto investors who have grown accustomed crypto scams will be protected when such a regulatory system becomes effective. In 12-18 months, the SARB will have such a regulatory system in place.
Naidoo, who speaks at a webinar hosted by PSG Konsult is quoted in the report, which highlights one of the reasons that the central bank changed its mind. He stated:
We now see [cryptocurrency] in a different light and consider it a financial asset. We hope to regulate it. It has brought in a lot of money, so it is important to regulate it and make it mainstream.
Crypto Exchanges Must Comply with Exchange Control Laws
However, the deputy governor insisted that the central banks intention was not to pick winners and losers, but to ensure that investors have “an adequate health warning and investor protection.” Naidoo stated that crypto is used in money laundering and other illicit activity, which is a concern that must be addressed.
On crypto exchanges, Naidoo said: “[They] would have to comply with exchange control laws such as anti-money-laundering and counter financing of terrorism rules. They would have to adhere to exchange contracts rules, just like people who trade in any currency or make cross-border transactions.
Naidoo, when asked whether the central bank took too long to decide on cryptocurrencies, replied that his institution was following the same approach as counterparts in Australia and Singapore.
“We are closely watching them and I don’t believe we are behind in virtual currency. Naidoo said that most central banks are focused upon two things: managing the crypto ecosystem and learning from it so it can adapt some of its lessons.