Crypto assets should be treated as financial products in SA. This makes it easier for regulators to monitor the market and helps to safeguard consumers.
A crypto asset is defined by the Financial Sector Conduct Authority as “a digital representation of value” in a gazette notice published on Wednesday, 19 October 2022. According to the announcement, a crypto asset can be traded and is not issued by the central bank. It can be transferred or stored for purposes of payment, investment or other forms of utility.
The announcement is the first legal step required to bring the crypto-asset industry within the South African legal framework, said Brent Peterson, head of legal at Easy Crypto Ltd., a crypto exchange.
The declaration, which takes effect immediately,
Governments around the world are driving to regulate cryptocurrencies to protect users from turbulent digital coins and fraudsters. US regulators and lawmakers are analysing ways to guide the operation of stablecoins. The declaration came about because of this and takes effect immediately.
“The licensing requirements that will flow from this classification will drive high standards in the industry, particularly in relation to consumer protection, with potential investors easily able to identify those providers that satisfy regulatory requirements,” Marius Reitz, general manager for Africa at crypto platform Luno, said in an emailed statement. “Another key benefit is that it should allow financial advisers to formally advise their clients on crypto investments.”
Global Web Index estimates about 15% of the population in SA invested in Bitcoin in 2020. The nascent industry already saw collapses, including the demise of Mirror Trading International in 2021, with losses totalling approximately $1.2 billion. The South African Reserve Bank and other regulators have been working together to recognise the coins as financial products. This will make coins easier to monitor from a money-laundering and terror-financing perspective.
Hannes Wessels, country head for cryptocurrency exchange Binance South Africa said, “This step would aid clarity, user protection and much-needed confidence in the ecosystem.”
Referenced from: Bloomberg Africa Addition Technology – 19 October 2022
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