South Africa can start regulating crypto service providers

Posted 18 January, 2019

South African Reserve Bank (SARB) made a motion to make exchanges and custodian services operating in the crypto industry pass the registration with the country's regulatory authorities.

The bank published a consultation paper designed in association with the Intergovernmental Fintech Working Group (IFWG) citing the need for the measures aimed at protecting consumers and investors in the crypto market especially given lack of regulation for sellers in this industry.

According to the released document, the SARB does not call for strict measures like a ban on crypto trading and names the proposed plan as “limited regulation”. Notably, the launch of the rules will be made in several stages in case of its acceptance.

"At this proposed level, an official body places specific requirements on providers of certain services in respect of crypto assets, without setting predefined conditions for formal authorisation to provide crypto assets-related products or services," reads the paper.

The first issue that should be considered is said to be a launch of the registration that will be a requirement for crypto exchanges and wallet services.

With a phase-based implementation, the bank stated that the rules might be revised and amended in line with the market environment.

"A final phase will assess the effectiveness of the regulatory actions that were implemented and if the regulatory actions meet the intended objectives," the bank noted. 

Notably, the crypto assets are unlikely to become legal tender in the country so far.

According to the bank, more details regarding the registration will be unveiled in the further report to be released in Q1 2019. 
 

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