South Africa’s financial regulator plans introducing a framework to protect vulnerable crypto investors
The Commissioner of South African Financial Sector Conduct Authority, Unathi Kamlana, has recently said that the government’s rolling out of a crypto regulatory framework is aimed at mitigating potential risks.
According to a Bloomberg report on December 10, Kamlana has said the financial regulator in South Africa has planned for presenting a regulatory framework early in 2022 and is intended at protecting investors from “potentially highly risky” crypto assets.
The Commissioner further stated that any framework on cryptocurrencies would be created in close coordination with the Prudential Authority and Financial Surveillance Board of the South African Reserve Bank.
Kamlana detailed that the government is looking to be able to intervene whenever the potential customers are trying products they don’t have knowledge of, or if they are highly risky. The authorities need to be very careful “to not just legitimize them,” Kamlana added.
The FSCA commissioner’s latest remarks also follow South Africa’s Intergovernmental Fintech Working Group that had said in June that it would be laying down the groundwork for a “phased and structured” regulation of cryptocurrencies in South Africa.
The nation’s policy on cryptocurrencies has largely been that of noninterference, but it has been active in warning the public that there has been “little protection” or recourse from the government’s side regarding scams or fraud.
When crypto investment platform AfriCrypt’s Co-Founder had allegedly disappeared with billions in user funds, the FSCA had said that it could not take action as crypto assets have been largely unregulated in the country.
After receiving the earning, major crypto exchange Binance had also challenged the FSCA’s authority, the financial regulator in South Africa. They argued instead that the country’s Financial Intelligence Centre had ensured that crypto firms were in compliance with local laws.
In May 2021, the South African Reserve Bank had begun an exploratory study on the rollout of a central bank digital currency (CBDC).
The central bank is also a part of a pilot program with those in Singapore, Australia and Malaysia for trialling international settlements using CBDCs.