How planned new crypto rules aim to protect the vulnerable in SA

accreditation
0:00
play article
Subscribers can listen to this article
Cryptocurrencies are redefining the future of money - (Google Photo)
Cryptocurrencies are redefining the future of money - (Google Photo)

South Africa’s financial regulator is planning to unveil a regulatory framework covering cryptocurrencies early next year to help protect vulnerable members of the society from highly risky assets.

The rules, designed in concert with peers like the prudential authority and the financial surveillance board, will establish how trading in coins such as Ethereum, XRP and Litecoin should be conducted, FSCA Commissioner Unathi Kamlana said in an interview on Friday.

Other issues to be examined include how the currencies interact with traditional financial products, the risks they pertain to bank balance sheets, and whether they threaten fiscal stability. 

“What we want to be able to do is to intervene when we think that what is provided to potential customers are products that they don’t understand that are potentially highly risky,” Kamlana said. “We must be very careful to not just legitimize them.”

The introduction of regulations follows two major crypto scams that originated in South Africa, both of which led to the disappearance of billions of dollars in investments. Digital currencies have moved from the periphery of the finance world to the mainstream over the past few years, leading to deeper scrutiny worldwide to prevent providers operating unfettered.

While Kamlana said that cryptocurrencies don’t pose a systemic risk to the stability of the financial services sector yet, the FSCA sees them as an asset rather than a currency. The regulator is monitoring the South African Reserve Bank’s plans to develop its own stable coin, seeing that as the most responsible approach to innovation, Kamlana said.

“I think that if I were to give advice to retail investors, I would say wait to see what comes out of the process of the work of the central bank,” he said. “The best outcome in terms of stable coins is what comes out of central bank innovation, given their reliability and stability.”

--With assistance from Arijit Ghosh and Amogelang Mbatha.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
15.92
+1.5%
Rand - Pound
19.88
+0.1%
Rand - Euro
16.79
+0.4%
Rand - Aus dollar
11.17
+0.7%
Rand - Yen
0.12
+1.7%
Gold
1,813.39
-0.6%
Silver
21.61
-0.1%
Palladium
2,054.00
+1.3%
Platinum
955.49
+1.0%
Brent Crude
114.24
+2.6%
Top 40
63,027
+0.8%
All Share
69,696
+0.7%
Resource 10
72,798
+1.3%
Industrial 25
77,796
+0.9%
Financial 15
15,898
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot