The Central Bank of South Africa is proposing a regulatory framework for bitcoin (BTC) and the other cryptocurrencies that envisage, among other things, viewing these assets as financial products rather than as means of payment and regulating them from that point of view.
According to the governor of the Federal Reserve Bank of South Africa, Kuben Naidoo, the entity has a framework in mind to cover the “need” to regulate the cryptocurrency space, where “there is a lot of money” that has come in from investors.
We hope to regulate them (cryptocurrencies) as a financial product. A lot of money has come in, and there is a need to regulate it. There is a need to bring it into the ‘mainstream’ orderly. In a way that balances excitement and hype with investor protection requirements. It’s critical to get them right.Kuben Naidoo, Governor of the Federal Reserve Bank of South Africa
The South African monetary body representative also explained that, in addition to viewing BTC and other assets as financial products, the regulatory framework they are proposing for cryptocurrencies would seek to control exchanges, applying the well-known “travel rule” of the Financial Action Task Force (FATF).
This means that South Africans will be able to withdraw more than R1 million (USD 59,100 approximately) in cryptocurrencies such as bitcoin from the country, but only if they communicate the origin of the funds and other personal details.
If you want to withdraw an amount less than R1 million in cryptocurrencies, no information will be requested. If it is more than one million, you will have to show the origin of the funds. This is what we want to do. We want to bring cryptocurrencies to the ‘mainstream’ in this regard.Kuben Naidoo, governor of the Federal Reserve Bank of South Africa
In addition, exchanges would have to comply with “fairly basic” KYC and couple with exchange control laws, tax laws, and other legislation to operate, according to Naidoo, who participated in a webinar on Tuesday afternoon, July 12.
KYC is an acronym for know-your-costumer, an identification mechanism that requires users to submit personal photographs and other information as a sine qua non-requirement to open an account.
Additionally, exchanges operating in South Africa will have to warn investors that they could lose money by disbursing funds in favor of cryptocurrencies. “This is not a bank deposit, it’s not a bank. You could, you could lose money,” the head of the South African central bank argued.
The framework planned by South Africa’s monetary body responds to the growing interest of locals in the new economy, who happen to be part of those who most search for “Bitcoin” on Google.
It also proves the incursion that cryptocurrencies have had in Africa, a continent that, according to Binance CEO Chanpeng Zhao, is “ready” for adoption.