The The Deputy Governor of the South African Reserve Bank says the institution has changed its stance on cryptocurrency and now sees it as a financial asset that needs to be regulated as such.
The SARB expects to have a regulatory framework on cryptocurrencies by the end of 2023.
According to Bitcon.com, SARB Deputy Governor Kuben Naidoo, who is also a member of the SARB Monetary Policy Committee, said such a framework would result in a more secure crypto ecosystem.
As explained in a report, when such a regulatory regime goes into effect, South African crypto investors – who have grown accustomed to crypto scams – will be protected by law. The SARB expects to have such a regulatory regime in place within 12-18 months.
Meanwhile, Naidoo, who spoke at a webinar hosted by PSG Konsult, is cited in the report highlighting one of the main reasons the central bank changed its mind. He said:
Our point of view has changed and now let’s consider [cryptocurrency] as a financial asset and we hope to regulate it as a financial asset. There was a lot of money that went in and it needs to be adjusted and generalized.
The deputy governor, however, insisted that the central bank’s intention is not to choose winners or losers, but to ensure that “investors receive a health warning and adequate investor protection.” Naidoo said the use of cryptography in money laundering and other illegal activities is a cause for concern that needs to be addressed, hence the SARB’s change of heart.
On cryptocurrency exchanges, Naidoo said: “[They] they should comply with foreign exchange control laws, such as anti-money laundering and anti-terrorist financing regulations. They should also comply with the rules of foreign currency contracts in the same way that people who trade in any currency and transact across borders are subject to these laws.
Asked if the central bank took too long to make this decision regarding cryptocurrencies, Naidoo insisted that his institution has taken the same approach as its counterparts in Australia, Singapore and the UK.
“We are watching them very closely and I don’t think we are behind the virtual currency curve. Most central banks focus on two things: regulating the broader crypto environment and, secondly, learning from it to see how they can take advantage of some of these lessons, ”added Naidoo.