The Deputy Governor of the South African Reserve Bank says the institution has changed its position on cryptocurrency, and now regards it to be a financial asset that must be regulated as such.
The SARB expects to have a cryptocurrency regulatory framework in place by the end of 2023.
According to Bitcon.com, the deputy governor of the SARB, Kuben Naidoo, who is also a member of SARB’s monetary policy committee, said such a framework would bring about a safer crypto ecosystem.
As explained in one report, when such a regulatory regime becomes effective, South African crypto investors — who have become accustomed to crypto scams — will be protected by the law. The SARB plans to have such a regulatory regime in place in 12 to 18 months’ time.
Meanwhile, Naidoo, who spoke at a webinar organised by PSG Konsult, is quoted in the report highlighting one of the key reasons the central bank changed its mind. He said:
Our view has changed and we now regard [cryptocurrency] as a financial asset and we hope to regulate it as a financial asset. There has been a lot of money that has flowed in and there is a need to regulate it and bring it into the mainstream.
The deputy governor, however, insisted that the central bank’s intention is not to pick winners or losers but to ensure that “investors have an adequate health warning and investor protection.” Naidoo claimed the use of crypto in money laundering and other illicit activities is a source of concern that needs to be addressed, hence the SARB’s change of mind.
On crypto exchanges, Naidoo said, “[They] would have to comply with exchange control laws such as anti-money-laundering and counter financing of terrorism rules. They would also have to comply with exchange contracts rules in the same way that people who trade in any currency and make cross-border transactions are subjected to those laws.”
When asked if the central bank had taken too long to make this decision about cryptocurrencies, Naidoo insisted his institution was taking the same approach as its counterparts in Australia, Singapore, and the United Kingdom.
“We are watching them very closely and I don’t believe that we are behind the curve in virtual currency. Most central banks are focused on two things: regulating the broad crypto environment, and secondly, learning from it to see how it can take on board some of those lessons,” Naidoo added.