South Africa Looks To Regulate Crypto As A Financial Asset: What You Need To Know

The South African Reserve Bank announced plans to initiate cryptocurrency regulations in 2023 in order to classify and treat digital currencies as financial assets.

What Happened: South African Reserve Bank Deputy Gov. Kuben Chetty presented plans for new legislation on crypto in a PSG-hosted online series on July 12. The legislation aims to have the Financial Intelligence Centre Act (FICA) regulate the crypto space. This prevents terrorism financing, tax evasion, money laundering and other illegitimate acts that may occur in the sector. The rollout of this plan involves listing cryptocurrencies as a schedule under the FICA.

Crypto exchanges will be required to have a Know Your Customer (KYC) precondition for users, under the updated regulatory framework. The regulations will also require exchanges to provide a risk warning, for potential losses by trading or investing.

Why It Matters: The South African Reserve Bank wants to stabilize digital innovation with investor protection by deeming cryptocurrencies to be financial assets.

South Africa has seen vastly growing crypto adoption in recent years, with an estimated 13% of its population holding crypto in some form. Thus, regulating these digital currencies looks to protect the nation’s six million cryptocurrency holders from its extreme market volatility.

Despite the recent market downtrend, as the crypto space continues to grow and intertwine itself with numerous industries in the long term, regulation is crucial. South Africa’s latest endeavour to regulate cryptocurrencies will benefit the sector as well as investors in years to come.