After much anticipation, the South African Reserve Bank (SARB) has finally revealed how the proposed regulatory framework will look like in regards to crypto assets.
While talking on stage during the just concluded Blockchain Africa Conference 2020, Anrich Daseman, Senior Fintech Specialist, SARB, gave clarity on the direction the South African central bank will take on the the issue of crypto assets.
SARB’s definition of a crypto asset is:
“A digital representation or token of value that is not issued by a central bank, but traded, transferred or stored electronically by natural or legal persons for the purpose of payment, investment, or other form of utility for the user and applies cryptography in the underlying technology.”
The SARB’s IFWG (Intergovernmental Fintech Working Group) is currently focusing their efforts on three verticals:
- AML (Anti-Money Laundering) and terrorism financing
- Consumer protection
- Regulatory arbitrage to resolve gaps in the regulatory framework
The South African Reserve Bank acknowledges that cryptocurrencies are a representation of a token of value not issued by a central bank that can be used for the purpose of payment, investment or other forms of utility, says @anrichd from the SARB.#BAC2020 pic.twitter.com/XrhHGZ1Iug
— Blockchain Africa Conference 2020 (@BlockchainZA) March 12, 2020
SARB’s Regulatory Recommendations
Here are the five regulatory recommendations that that SARB will be putting forward to the government:
- Accountability of crypto asset service providers in terms of AML and CFT (combating the financing of terrorism)
- Crypto assets to be declared financial services / products
- Introduction of an exchange control regime for cross border flows surveillance
- No need for financial market infrastructure interaction for money settlements
- Existence of a monitoring programme for cryptoassets
The SARB is expected to publish the paper for the above proposed regulations by end of April 2020 where stakeholders and adopters can review and propose changes.
When asked about the recent bank accounts closures of crypto exchanges, Daseman said:
“SARB will not intervene in the relationship between a bank and its client. That decision is up to the individual bank, based on their own risk assessment. Hopefully our upcoming regulatory framework helps the banks make more informed decisions of this nature.”
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