South Africa to introduce digital currency regulations in early 2022December 15, 2021
South Africa’s top financial watchdog is set to introduce digital currency regulations early next year. The regulator believes that scammers are taking advantage of the vulnerable investors and running off with millions of dollars since the investors have no avenues for recourse.
South Africa has been one of the continent’s biggest digital currency markets, topping the list alongside Kenya, Nigeria, and Ghana. According to a study by social media management company Hootsuite, a couple of years back, South Africa ranked first globally for the proportion of Internet users who own digital currencies at 10.7%.
However, the industry is still largely unregulated, and this has allowed multi-million dollar scams such as Mirror Trading International and Africrypt to thrive.
This is about to change, Bloomberg reports. Speaking to the media outlet, Unathi Kamlana, the Financial Sector Conduct Authority (FSCA) commissioner, said that the watchdog has been working on regulations for the sector, which it intends to unveil in early 2022.
The FSCA has been working with its peers in other countries and local authorities such as the Financial Surveillance Board on the formulation of the regulations.
“What we want to be able to do is to intervene when we think that what is provided to potential customers are products that they don’t understand that are potentially highly risky. We must be very careful to not just legitimize them,” Kamlana told Bloomberg.
Aside from putting measures in place to protect investors from potential scammers or sophisticated products that put their money at risk, the regulator is looking to examine how digital currencies interact with traditional financial products. It’s also investigating whether they threaten fiscal stability in the country whose economy is the second largest in Africa.
Kamlana further revealed that the FSCA considers Bitcoin an asset and not a currency, just like many other regulators worldwide. This misguided outlook has been spurred by the BTC faction, which has been touting it to be digital gold after limiting the protocol to 7 transactions per second. However, Satoshi Nakamoto was crystal clear that Bitcoin is electronic peer-to-peer cash, a vision that Bitcoin SV is now fulfilling.
The commissioner also revealed that the FSCA is closely monitoring the Reserve Bank’s digital rand plans.
“I think that if I were to give advice to retail investors, I would say wait to see what comes out of the process of the work of the central bank. The best outcome in terms of stable coins is what comes out of central bank innovation, given their reliability and stability,” he concluded.
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