The central bank of South Africa wants to implement regulations on the sector and control cryptocurrencies as financial assets within the next 12 months.
Deputy Governor of the South Africa Reserve Bank (SARB), Kuben Naidoo, suggested that bitcoin and other cryptocurrencies have several benefits for the financial system. However, he asserted that the sector is full of hype that may be isolated from thorough standards.
In the following 12 months, the SARB plans to enact this legislation, at which point digital assets will be governed as financial assets rather than currencies.
South Africa’s Method
The deputy governor of South Africa’s central bank, Kuben Naidoo, stated in a recent interview that the cryptocurrency industry is problematic because it is full of “good apples and rotten apples,” or, in other words, worthwhile initiatives and other things that might be compared to pyramid schemes.
In light of this, the institution will implement the necessary regulations rather than outright prohibit the asset type. According to Naidoo, society cannot use bitcoin and alternative coins as a form of payment in their daily lives, hence they cannot be used as currencies.
On the other side, they might enhance the world’s financial system and represent a technology that is gaining popularity. As a result, they will be categorized as financial assets under the regulatory framework that the bank should implement in the following year:
“We are not intent on regulating it as a currency as you can’t walk into a shop and use it to buy something. Instead, our view has changed to regulating (cryptocurrencies) as financial assets. There is a need to regulate it and bring it into the mainstream, but in a way that balances the hype and with the investor protection that is critical.”
It is not surprising that the need for enhanced safety for domestic investors is being emphasized given the recent high-profile bitcoin frauds in South Africa.
The Cajee brothers, who founded the digital asset investment firm Africrypt, stole 69,000 BTC last year and then disappeared before users or law enforcement could react. At that time, the assets were valued in USD at about $2.3 billion.
Naidoo gave the assurance that the upcoming regulatory framework would pay attention to such schemes and keep an eye out for instances in which criminals exploit digital currency for money laundering and terrorism financing.
The Bank of Indonesia has a Comparable Position
Doni Primanto Joewono, the governor of Indonesia’s central bank, stated earlier this week that digital assets might advance the world’s monetary system and give people access to financial inclusion. But he asserts that in the absence of adequate regulations, the industry would continue to be risky for investors.
According to him, the digitization that has taken over the world since the coronavirus pandemic’s emergence is linked to cryptocurrency. After the health crisis is over, digital services will continue to be popular, which will support the growth of bitcoin and other cryptocurrencies in the future.