September 25, 2022

South African Treasury to Amend Laws this Year for Crypto Regulation

According to the South African Treasury, the amendments that are to be made to the financial laws in the country for including crypto asset service providers as accountable institutions will be finalized this year. It said that the Financial Intelligence Centre (FIC) Act that will include said proposals would be confirmed in 2022. The Financial Action Task Force (FATF) had identified significant weaknesses in South Africa’s counter-financing and anti-money laundering systems. Therefore, they are now moving to regulate crypto asset service providers in order to address these issues.

The South African Treasury elaborated in its latest budget document that the amendments that have been proposed will help the FIC Act align with the standards that have been established by the FATF. The said amendments have been open for public opinion since June of last year. The treasury stated in the budget review document that this change in the financial laws would address the concerns of the use of crypto assets for terror risk financing and money laundering and align the FIC Act with the standards that the FATF has established for virtual assets and their service providers. The latest remarks of the Treasury about crypto assets come a number of months after a position paper was published by the Intergovernmental Fintech Working Group (IFWG) for the regulation of crypto assets.

However, it had been reported at the time that the IFWG had stated that it should not be considered an endorsement of cryptocurrencies. Meanwhile, the budget review document of the Treasury also revealed that it is expecting to declare crypto assets as financial products that would fall under the Financial Advisory and Intermediary Services Act (FAIS). According to the treasury, the purpose of this declaration is for the protection of consumers. The document elaborated that this declaration would mean that anyone offering intermediary services or advice regarding crypto-assets has to be recognized as a financial services provider under the act, thereby complying with its requirements.

Crypto platforms and exchanges would also fall under this category, along with advisors and brokers. The entire proposal will be finalized in this year. Not only will the current laws in the country be amended, but the review document also said that they are working on regulating crypto assets under the Exchange Control Regulations of 1961 in South Africa. The document also made a mention of stablecoinsand said that a follow-up paper would be published by the IFWG later in the year.

This paper would be focused on discussing the risks associated with stablecoins. The document also disclosed that the South African Treasury is considering ways for regulating crypto mining that is electricity-intensive, which it said is environmentally harmful. South Africa is just one more country that is now working on regulating the crypto industry. With the widespread use and adoption of cryptocurrencies, a number of countries all over the globe are working on coming up with proper and detailed regulations for dealing with these digital assets that are quite unpredictable and risky.

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