As part of a series of changes to South African financial law, cryptocurrency service providers will become responsible institutions. A report from the South African finance minister announced that several cryptocurrencies “will be completed by 2022.”
In short, the proposed changes ensure that “any person who provides advice or intermediary services in connection with cryptocurrencies must be recognized as a financial services provider by law and must comply with the requirements of the law.”
Marius Ritz, general manager of crypto platform Luno in South Africa, highlighted the changes that “credible crypto players welcome regulation”, adding that “regulation is an important part of the crypto ecosystem.”
Ritz told Cointelegraph:
“The regulation will make it easier for the public to distinguish between licensed and unlicensed crypto service providers and find a safe place to store and purchase cryptocurrencies.”
However, for Herman Vivier, founder of Bitcoin Ekasi, a Bitcoin Beach-inspired project in South Africa, it’s a different story. He told Cointelegraph that he “knows that clients and anti-money laundering regulations are pushing already marginalized people to the margins of society.” Finally, “authorities tend to approach situations with a solution that suits everyone, which for many turns out to be no solution at all.”
Bitcoin Ecci Township project. Source: Bitcoin Ekasi Twitter
Vivier told Cointelegraph:
“Ideally, there should be a limit where people with incomes below a certain level need zero compliance/verification, because really, for example, if the limit is R5,000 per month [$330], what is the potential harm? what does a person do with this amount?”
However, the decision of the Ministry of Finance to tighten control over “money laundering and financing of terrorism using cryptocurrencies” did not come as a surprise to Bitcoin Ekasi and other participants in the South African crypto industry.
South African authorities have previously warned big players like Binance against operating in the country. Elsewhere, Unati Kamlana, commissioner of the South African Financial Conduct Authority, has been a vocal advocate for the protection of vulnerable crypto investors.
Skyscraper Luno in Cape Town, ZA. Source: Luno
According to Lono, “a notable aspect of the RBA’s approach is the involvement of the industry in discussions from the very beginning.” The Ritz mode is well defined:
“The regulation will also increase the number of formal partnerships between banks and crypto companies, which will encourage greater use of cryptocurrencies.”
Related: South Africa to reconsider its national cryptocurrency policy stance
As a further development, the financial report proposes “risks associated with so-called stack coins,” which will be reviewed later this year. In South Africa, central banks’ plans for digital currencies (CBDCs) are public and widely discussed. Ultimately, digital currency for commercial banks is a way for governments to better manage cash flow, as opposed to privately stacked coins like Tether (USDT).
Reitz is convinced that South Africa could “see the launch of more CBDCS in 2022” as South Africa “considers a digital currency.” CBDCs can provide a “comfortable seat for regulators”.