By The powers that be in South Africa are currently in the process of collating comments for proposed policy changes which could ultimately lead to regulatory certainty for cryptocurrencies amongst other things.
As per the words of the South African Reserve Bank (SARB) as well as the National Treasury, a complete revamp of the National Payment System (NPS), which is a set of infrastructures and processes that enable the transfer of funds between consumers and businesses, is imperative as the current legislation behind the system – the National Payment System Act 78 of 1998 has long been dubbed as outdated.
However, a review is in the pipeline and will align the current legislation with that of the global trend and ensure that the regulatory veil covers all aspects of the economy which were previously overlooked & unregulated such as the cryptocurrency arena.
One of the recommendations read as follows:
“[Seeks to] Allow/enable new or unregulated service providers, services, systems and instruments (e.g. virtual currencies, distributed ledger technologies and fintech companies)”
Safety & Efficiency on the Horizon:
As per SARB & the National Treasury, continued efficiency & safety of the national payment system can only be assured by means of a comprehensive review process.
An excerpt from a joint statement by SARB & The National Treasury states:
“As the payments industry moves towards a digital age and becomes increasingly innovative, and financial technology becomes more advanced, the emergence of new payment methods, technologies, services, risks, participants and ‘payment systems’ have become increasingly prominent and challenge the traditional payments regulatory landscape.”
Both institutions will welcome comments until the end of February 2019.
In comparison to other African countries such as Zimbabwe who have taken a completely negative stance towards crypto, the southernmost nation of Africa have been pretty progressive towards the world of digital currencies. Earlier this year, when many authorities in different jurisdictions began banning cryptocurrencies, Africa’s most industrialised economy instead went the opposite route and SA’s central bank assembled a team whose sole purpose was to monitor all digital currencies.
Regulation Could Have Adverse Effects In South Africa:
Back when SA took their positive stance towards crypto, it was reported that SARB were in favour of self-regulation and an official at the apex time argued that regulation of cryptocurrencies could, in fact, have adverse effects:
“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.”
As reported by CoinBeat, the South African Reserve Bank has also fully embraced DLT (distributed ledger technology) with their successful Project Khoka – which is a blockchain platform which they built upon the Ethereum blockchain for use in processing interbank transactions and just three months ago the project won the award for Best Distributed Ledger Initiative at a worldwide central banking forum.
Could South Africa’s stance on digital currencies and moves to seek regulatory certainty lead to other growing economies in Africa to adopt cryptocurrencies? Let us know your thoughts.
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