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Governments have long been unsure over whether to treat bitcoin, Etherium and other crypto currencies as real money or not. If crypto currencies are indeed no different from fiat currencies like the Dollar or Rand, what rules should states then put in place to ensure they’re safe for all to use?
Perhaps we will finally soon know. This year — believes the manager of bitcoin exchange Luno’s SA office, Marius Reitz — is likely to see regulators provide more clarity on their stance towards cryptocurrency.
In an interview with Ventureburn late last year, Reitz said he hopes such clarity will provide consumers with more confidence when it comes to investing in cryptocurrency.
A government working group is expected to later this year release a final research paper on cryptocurrency
“I think we will see investors — not individual investors but venture capital companies — continuing to invest in cryptocurrency and blockchain startups,” he explained.
Reitz’s predictions could be right. When G20 leaders met in Buenos Aires, Argentina last month for their annual summit, they pledged to regulate crypto-assets.
Last Wednesday (2 January), financial publication Business Day reported that South African finance minister Tito Mboweni said — in a written reply to a parliamentary question — that the government had last year established a crypto-assets regulatory working group.
It includes members from the Reserve Bank, The SA Revenue Services (Sars), The Treasury, The Financial Intelligence Centre and the Financial Sector Conduct Authority.
The working group aims to develop an official governmental response and regulatory framework on cryptocurrency, which Mboweni said will be released in the form of a research paper later this year.
Ventureburn today (7 January) sought comment from The Reserve Bank on whether it expects to announce any changes on its stance on cryptocurrency this year, and when the outcomes of the working group will likely be released but had not received a response at the time of publication.
Authorities working on regulation
Earlier, Reitz told Ventureburn that regulators in various jurisdictions, including Australia, the UK and Malaysia, have spent the last two or more years working on regulation and trying to understand cryptocurrency.
“I think most of them — and we’ve seen the Australians, the Malaysian Central Bank, Monetary Authority of Singapore, the UK’s Financial Conduct Authority — have started to formulate and publicly share their crypto-policies,” he explained.
This, Reitz explained, is “good news for the market” in terms of consumer protection — as it would help root out bad actors, including those crypto exchanges with low regard for consumer safety.
He was adamant that regulation will not stifle innovation, but will instead ensure that there is a “safer environment for consumers”.
Reserve bank ‘definitely setting a trend’
Reitz pointed out that among other African regulators, SA’s Reserve Bank is “definitely setting a trend”.
Last year The Reserve Bank launched Project Khokha, a proof of concept designed to simulate a real world trial of distributed ledger technology-based wholesale payment system (Check out the outcomes of the trial in this pdf).
At the time of last year’s interview, Reitz said The Reserve Bank and the cryptocurrency working group were “in the process or in the final stages” of drafting a crypto policy that would inform regulation of the sector.
The policy, he said, will likely focus on consumer protection, Know Your Client (KYC) and Anti-money-laundering (AML) procedures.
He added that regulation is also likely to be crafted to safeguard customer assets, while rules could also be added on data protection and the addition of new coins.
African regulators still cautious
Meanwhile despite South Africa’s more progressive stance towards crypto currencies, some African regulators, like Nigeria have adopted a more cautious approach — with Nigerian tech publication TechCabal reporting in May last year that the Central Bank of Nigeria has warned Nigerians to deal with the cryptocurrencies “at their own risk”.
According to the same article, regulators from African countries that have either banned or are not interested in cryptocurrencies include Morocco, Egypt, Botswana and Rwanda.
But others are more keen on exploring cryptocurrencies.
Kenyan publication The Star reported last October that Ghana and Kenya were both in the consultation phase around the regulation of cryptocurrency.
Regulation, it seems, is just around the corner. All African countries should get on board.
Featured image: geralt via Pixabay