The cryptocurrency craze is ongoing in all four corners of the world. Unfortunately, no country has a working regulatory framework to guide cryptocurrencies. Thus, a few countries rush to introduce a framework regarding the assets. Some countries, including South Africa, are experiencing unprecedented money flow. So there is a need to find a way to regulate and make crypto part of the financial system.
Of course, there are many reasons why a country may find it necessary to regulate cryptos; they include the following:
- Regulations would help reduce speculations and bring stability to the market
- The rules would protect investors and enhance confidence in the crypto market
- Regulations would eliminate speculations and could help develop a safer crypto ecosystem for anyone looking for the best crypto in South Africa.
For this reason, South African lawmakers have passed laws that add the crypto business to the country’s accountable institutions list. In doing so, any business that deals in cryptocurrencies will be expected to identify and keep proper records of its clients.
South African legislators have added the rules to the country’s Financial Intelligence Act of 2001, which is expected to be effective on Dec 19th.
Elsewhere, lawmakers across the globe have been routing for transparency and improved standards in the crypto sector. So, by adding crypto businesses to the list of accountable institutions, the country expects businesses that involve themselves in crypto activities to keep records of old and new clients to help improve transparency and streamline operations in the market. Companies targeted include those that convert crypto assets to fiat currency or to another crypto asset. Similarly, they target those that conduct crypto-based transactions.
The lawmakers have amended schedules in the 2001 Financial Intelligent Centre act and will be operationalized on Dec 19th. The law targets businesses that offer custody services and those issuing crypto assets. The Financial Sector Conduct Authority has already designated crypto assets as financial products.
In the meantime, the South African finance minister has outlined what a crypto asset is in the eyes of the government. According to him, a crypto asset is a digital representation of value that can be transferred among community users electronically. It includes anything internet users consider a store of value, a unit of account, and a medium of exchange.
What are the benefits of the move?
To bring stability to the market
Regulating cryptocurrency is expected to benefit investors, the community, and the general public. According to the lawmakers, the move will help reduce speculations among users and result in higher investor confidence. Also, making the market more speculative will draw in investors who have resisted investing in cryptos owing to the speculative nature of the market and volatility.
Enhance investor protection
Cybercriminals know that the crypto market is growing and has become a multibillion-dollar market. They also know billions of dollars worth of crypto exchange hands each day. Besides, dubious crypto exchanges have sprung up, so if not regulated, they are likely to dupe the public and lead to loss of money. So there is a need to develop compliance rules to which any exchange planning to offer services from South Africa should adhere.
Create a safer crypto ecosystem
Due to a lack of regulations, the crypto market continues to be a mystery to many players. This has created room for fraudsters and rug pullers to thrive. Besides, there are players who manipulate the market to their selfish benefit. Therefore, there is a need to develop a regulatory framework and standards like those in other markets. The rules will create a safer ecosystem for all players.
South African lawmakers have now joined the rest of the world in acknowledging that digital currencies play an important role in today’s world. So adding crypto businesses as accountable institutions will not just control the crypto market but instil discipline in the players. It will go a long way to reducing scammers and fraudsters from the market. Besides, it will enhance confidence, reduce speculative activities and stabilize the market.