South Africa to Regulate Cryptocurrencies as “Financial Assets” by 2023
The South African Reserve Bank recently announced that it will legalize digital currencies as financial assets by 2023.
- South African Reserve Bank Deputy Gov. Kuben announced the government’s plans to regulate cryptocurrencies as financial assets by 2023 while attending a PSG-hosted online series on July 12.
- Financial Intelligence Centre Act (FICA) will oversee the crypto industry in South Africa.
- Experts believe crypto asset regulation will end the use of cryptocurrencies for money laundering, terrorism financing, and tax evasion in the country.
A move that could be defined as a big moment for the crypto assets industry in the African region, the regional economic powerhouse, South Africa, may soon regulate cryptocurrencies as a financial asset in the country. The rainbow nation’s central bank, South African Reserve Bank, recently announced that it will legalize digital currencies as financial assets by 2023.
The Fact of the Matter
Attending a PSG-hosted online series on July 12, South African Reserve Bank Deputy Gov. Kuben announced plans on crypto legislation with the Financial Intelligence Centre Act (FICA) overseeing the nascent sector as a regulator.
With this move, the South African central bank plans to put an end to the use of digital assets in funding illicit activities, such as terrorism financing and money laundering, among other things.
Speaking of the popularity of digital assets in the rainbow nation, recent statistics prove that crypto assets are slowly becoming a popular investment option among South Africans. For instance, Punchng’s latest report states that 22% of South African adults hold cryptocurrencies, which puts the number of crypto users in the country at around 7.6 million.
Thus, it was about the time when the country’s central bank took concrete steps to regulate the industry to support innovation & protect investors at the same time. And there couldn’t have been a better time, as global regulators have begun coordination to draft international regulations considering the borderless nature of crypto transactions.
What Changes for Virtual Asset Service Providers Such as Exchanges?
Once the proposal is implemented, virtual assets service providers will have to collect personal information from their users under the compulsory Know Your Customer (KYC) clause. Besides this, exchanges will also have to highlight the risks of trading digital assets to its users.
South Africa’s digital assets regulation is just one of many recent regulatory changes to come for South African Virtual Asset Service Providers (VASPs). For instance, the adoption of FATF’s Travel Rule could be next. After all, FATF has been urging countries to fasten up the adoption of the Travel Rule, and South Africa being a FATF member since 2003, could very well be the next country to enforce it. That is why South African VASPs must begin preparing for it beforehand.
All VASPs need to begin complying with the Travel Rule is a Travel Rule Service Provider (TRSP). And we have the best solution to suggest: Veriscope! Read more about it here: https://www.veriscope.network/ and contact our BizDev team for a discussion here: https://www.veriscope.network/contact.