- South Africa presents new crypto cross-border regulations.
- Lawmakers aim the new legislation at halting illegal crypto activity.
- Effective coordination of financial bodies leads to the new regulation.
South Africa is making preparations to introduce a new legislative framework for the conduct of cryptocurrency transactions across international borders.
Earlier this year, the Minister of Finance, Enoch Godongwana, said he expected the South African Reserve Bank (SARB) to make the framework available.
This action is a bid to control the operations of crypto asset service providers (CASPs) that engage in transferring values across borders. This is in response to a landmark ruling by the Pretoria High Court, which excluded cryptocurrencies from other exchange control regulations.
The new framework will fill the gaps revealed by the court ruling and make exchange control laws consistent with the realities of the digital asset markets.
Unveiling the Crypto Control Plan: What to Expect
The proposed structure will apply to crypto exchanges like Binance, Luno, and VALR with the aim of establishing precise guidelines, administrative functions, and reporting obligations.
These are aimed at stopping regulatory arbitrage and reducing cross-border crypto illicit financial flows.
Godongwana highlighted that it is in collaboration with SARB that the National Treasury and Financial Sector Conduct Authority (FSCA) are collaborating. Collectively, they have the goal of bringing exchange control legislation up to date and strengthening it so that it encompasses digital assets.
The Finance Minister pointed out that the framework will deal with three major regulatory issues, which are money laundering and terrorist financing, consumer protection and market conduct, and preventing circumvention of exchange controls.
A Coordinated Financial Oversight Effort
Coordination of the regulation initiative is done under the Financial Regulators Steering Committee, which is made up of SARB, FSCA, the Prudential Authority, and the National Treasury. Collective control acts as a guarantee of the uniform application of regulation without any loopholes.
Since December 2022, regulators have designated CASPs as responsible institutions under the Financial Intelligence Centre Act.
This classification makes them susceptible to anti-money laundering (AML) and anti-terrorism financing (CTF) regulations and, therefore, strengthens the overall position of South Africa as it has to secure its financial system.
Godongwana said these new steps mark a significant step in our approach to crypto, with South Africa determined to approach crypto innovation responsibly.
The regulatory action will be a compromise between the facilitation of innovation and safeguarding against financial crimes and consumer risks.
The strong plan of South Africa indicates that the nation is ready to control digital finance as it avoids any illegal operations. The new framework will provide much-needed transparency and regulation to an increasingly popular crypto industry in the country.
