South Africa: The New Crypto Hotspot?
The South Africa Reserve Bank (SARB) says that the new rules will become applicable during the early months of 2020 following a consultation period that has lasted nearly five years. The country has been virtually lost regarding how cryptocurrencies should be monitored and governed and has been seeking advice and outside counsel from digital currency experts since 2014.
According to Kuben Naidoo – the bank’s deputy governor – some of the institution’s primary concerns are preventing white-collar crimes and stopping cryptocurrency fraud. Digital currencies, he says, can be used to evade currency controls, and the bank is looking to ensure this risk comes to an end. Thus, one of the new rules will be to limit the amount of currency leaving the region.
This rule would also apply to bitcoin and any of its altcoin cousins. If the bank notices a very large amount of crypto being transferred to an outside wallet or party, an investigation is likely to follow.
Africa has had a relatively mixed relationship with cryptocurrency. Several smaller banks throughout the continent have already sought to limit the amount of crypto activity occurring, such as the First National Bank (FNB). The institution is one of South Africa’s “big five” banks and has already shut down all its customers’ accounts that may be dealing in digital assets.
FNB says there is too much risk involved with crypto, including its volatility and its ties to criminal activity such as money laundering.
At the same time, many see Africa as a prime region to boost crypto trading and blockchain innovation. Recently, Square and Twitter CEO Jack Dorsey announced he would be moving to an unnamed country in Africa from anywhere between three to six months after touring several regions. His goal is to establish a stronger crypto presence on the continent and potentially bring more crypto trading to Africa’s people.
Among the countries Dorsey toured were Nigeria, Ethiopia, Ghana and South Africa. Granted South Africa’s new crypto regulations prove to be too strong or constrictive for Dorsey, he may have to settle on one of the other three regions to bring his plans to life.
Establishing a Crypto Presence
Dorsey announced in a recent tweet:
Sad to be leaving the continent… for now. Africa will define the future (especially the bitcoin one!) Not sure where yet, but I’ll be living here for three to six months mid-2020.
In addition, several new blockchain and crypto startups have chosen Africa as their home, among them Bit Hub, which was founded four years ago by John Karanja. The company seeks to promote the presence of crypto in the country and limit the failings of traditional finance in Africa.