- South Africa aims to expedite its regulatory timeline and propose a final framework within three to six months.
- The recent AfriCfrypt scam that saw the Cajee brothers make off with more than $2 billion could be the major cause.
- South African regulators might impose tougher rules.
Historically, South Africa has been holding a noninterference yet cautionary stance when addressing cryptocurrencies. Back in 2014, the country’s National Treasury commented on cryptocurrencies for the first time, simply informing about the risks that come with investment in the crypto market.
However, following a number of appalling crypto scams, South Africa is now walking away from its former policy and aims to bring regulations to the crypto industry.
As the first move, South Africa’s Intergovernmental Fintech Working Group (IFWG) published a position paper a couple of weeks ago. In the paper, the country contrived the groundwork for its financial watchdog to institute the fundamental crypto regulations.
Though, the recent AfriCfrypt scam that saw the Cajee brothers make off with more than $2 billion has compelled South African lawmakers to expedite their regulatory framework and stiffen oversight of crypto assets.
South Africa Hastens to Regulate the Crypto Market
South Africa aims to expedite its regulatory timeline and propose a final framework in three to six months, according to a recent report. Kuben Naidoo, chief executive officer of Prudential Authority, South Africa’s banking regulator, said they aim to define cryptocurrencies as financial products and then create a regulatory framework. He stated:
We are trying to put in place the regulatory framework quickly. Defining this as a financial product and then developing the regulatory framework is important.
Naidoo further reiterated that the crypto market is quite speculative, but they seek to bring investor protection. “We are of the view that cryptocurrencies are risky and we want to ensure that the financial sector is aware of those risks and pricing for those risks properly. We think it’s a market-conduct matter. It’s an investor-protection matter,” he said.
Aside from AfriCfrypt, another striking scam, Mirror Trading International, which was labeled the biggest crypto scam of 2020 also took place in South Africa. Mirror Trading International (MTI) deceived its victims by promising constant daily returns of 0.5%. This resulted in MTI taking in $589 million from more than 471,000 deposits.
Following these recent unpleasant events, we can expect South African regulators to impose tougher rules and bring more restrictions.