As Bitcoin is penetrating into Africa, South Africa has revealed its stance on the crypto industry.
In a policy paper published this week, the Intergovernmental Fintech Working Group (IFWG) recommended cryptocurrencies to “remain without legal tender status.”
Members of the IFWG include the South African Reserve Bank, the Financial Sector Conduct Authority and the National Treasury.
The IFWG also referred to a survey that shows that 10.7 percent of South African internet users have some investments in Bitcoin, making the regulations of the sector a priority.
With this paper, the South African regulators are attempting to draft the first crypto-specific framework bringing strict financial oversight, a licensure structure, and closer cash flow monitoring.
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“Crypto assets and the various activities associated with this innovation can no longer remain outside of the regulatory perimeter,” the policy paper stated.
Aligning with the FATF
The policy paper also suggested implementation of the recommendations made by the Financial Action Task Force (FATF), the “new technologies” anti-money laundering measures, and the so-called “Travel Rule” in particular.
Also, a strict domestic oversight on the booming cryptocurrency industry is necessary, according to the policy paper.
The IFWG is also seeking a ban on using crypto as a settlement tool within the country’s financial infrastructure. It is also concerned about the impact of cryptocurrencies on fiat currencies.
“The central bank’s role in ensuring an efficient monetary system could become less effective, as the demand for fiat currency would decrease and crypto assets would effectively compete with fiat currencies,” the paper added.
For initial coin offerings (ICO), the paper also proposed their alignment with the existing traditional securities governance schemes. However, payment and utility token issuers have to submit their whitepaper to the regulators.