The South African Reserve Bank (SARB) deputy governor recently stated that the organization has revised its stance on cryptocurrencies and now considers them to be financial assets that need to be regulated as such. By the end of 2023, the SARB plans to have a regulatory framework for cryptocurrencies in place.
Kuben Naidoo, the SARB’s deputy governor, recently declared that the organization had changed its position on cryptocurrencies and is now seeking to introduce a framework that regulates transactions involving cryptocurrencies. A framework like that, according to Naidoo, a member of the SARB’s monetary policy committee, would result in a more secure crypto ecosystem.
According to one report, when such a regulatory framework is put into place, South African cryptocurrency investors who are accustomed to scams will be safeguarded by the law. In 12 to 18 months, the SARB hopes to have such a regulatory system in place.
Meanwhile, Naidoo, who spoke at a webinar organized by PSG Konsult, is quoted in the report highlighting one of the key reasons the central bank changed its mind. He said:
Our view has changed and we now regard [cryptocurrency] as a financial asset and we hope to regulate it as a financial asset. There has been a lot of money that has flowed in and there is a need to regulate it and bring it into the mainstream.
However, the deputy governor emphasized that the goal of the central bank is to “ensure that investors have an adequate health warning and investor protection,” not to pick winners or losers. Naidoo asserted that the SARB’s change of heart was due to concerns about the use of cryptocurrency in money laundering and other illegal activities that need to be addressed.
Naidoo stated the following about cryptocurrency exchanges: “[They] would have to abide by exchange control laws, such as anti-money-laundering and counter financing of terrorism rules. The rules governing exchange contracts would also apply to them, just as they do to anyone who transacts in foreign currencies or does business internationally.
When asked if the central bank had taken too long to make this decision about cryptocurrencies, Naidoo insisted his institution was taking the same approach as its counterparts in Australia, Singapore and the United Kingdom.
“We are watching them very closely and I don’t believe that we are behind the curve in virtual currency. Most central banks are focused on two things: regulating the broad crypto environment, and secondly, learning from it to see how it can take on board some of those lessons,” Naidoo added.