Pension Funds Cannot Invest in Cryptocurrencies, Says South African Treasury

The South African government has published a regulatory draft restricting pension funds from investing in cryptocurrencies

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The South African government has published a regulatory draft restricting pension funds from investing in cryptocurrencies.

According to the South African Treasury, the new restriction on Regulation 28 on retirement funds’ investment in crypto assets has been introduced because they are seen to be of ‘very high risk.’

The draft clearly states that ‘a fund may not invest in crypto-assets directly or indirectly.’

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According to the draft regulation:

“Crypto-asset means a digital representation of value that is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques and uses distributed ledger technology.”

                                          – The Treasury, South African

The definition of crypto assets however seems to include anything issued on the blockchain including tokenized conventional assets such as stocks, bonds, and real estate.

From this broad categorization, it would seem that the several incumbent regulated institutions working on tokenizing conventional assets on the blockchain might thus be unable to issue such to pension funds.

According to the announcement:

“This restriction is in line with the Intergovernmental Fintech Working Group (IFWG) policy proposal of not allowing collective investment schemes and pension funds to have exposure to crypto-assets be maintained until further notice.”

                                – The Treasury, South Africa

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