‘SA Reserve Bank offers no protection for those that take part in ICOs’

As China’s ban on initial coin offerings (ICOs) has lead to renewed concerns over the use of cryptocurrencies, South Africa’s Reserve Bank says it offers “no recourse or protection” to consumers involved in ICOs.

In response to questions from Ventureburn on whether it is concerned on the legality of ICOs following their banning in China and move to regulate them in the US, the Reserve Bank said in a statement to Ventureburn that it has taken note of regulatory developments surrounding initial coin offerings (ICOs).

“In South Africa, cryptocurrencies are not guaranteed by the SARB (SA Reserve Bank), hence offer no recourse or protection to consumers thereof,” the Reserve Bank said.

While the Reserve Bank’s position on virtual currencies is set out in the Position Paper on Virtual Currencies issued in 2014, the bank recently established a dedicated fintech programme to increase focus and assist the existing working groups to research and analyse technology innovations in the financial services industry.

The South African Reserve Bank offers no protection for crypto currencies, those that participate in ICOs

Part of the review is aimed at assessing the impact on cross border financial flows and stability of the financial system.

Working groups are currently reviewing the existing policy stances together with the cross-disciplinary intergovernmental working group consisting of the Financial Intelligence Centre (FIC), Financial Services Board (FSB) and National Treasury.

The Reserve Bank said it has also been collaborating with global standard setting bodies, such as the Committee for Payments and Market Infrastructure (CPMI) of the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) to ensure that any positions taken are cognisant of international approaches and does not present opportunities for regulatory arbitrage, due to the global nature of some of these developments, in particular cryptocurrencies.

The Reserve Bank however said it does not currently employ innovation facilitators, such as innovation hubs, regulatory sandboxes or accelerators.

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