South African Reserve Bank (SARB) Sets Up Fintech Task Team Focussed on Cryptocurrency


During the last days, we have received important news from South Africa and cryptocurrencies. Now, the South African Reserve Bank (SARB), has decided to set up a full-time cryptocurrency task team to monitor blockchain and virtual currency activities in the country.

 

SARB’s Crypto Task Team

 

South Africa is moving forward in order to regulate and control a highly unregulated market. The SARB will create a team that will be in charge of monitoring how blockchain and cryptocurrencies develop in the country. The team is going to assist the SARB in order to create a clear regulatory framework that would allow cryptocurrencies and fin-tech innovation to properly spread.

 

By imposing hard regulations innovation and investments tend to chose friendlier locations. If instead, no regulations are implemented, scams and other illicit activities have the possibility to spread, destroying consumers’ and investors’ trust in the system. As reported by the local media, Bridget King, finance and banking practice director at Cliffe Dekker Hofmeyr, explained:

“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there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.”

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Regulating virtual currencies is not an easy task. That’s why the SARB is setting up this specialized task team.

 

Regulations to Legitimize the Environment

 

The team that will be in charge of analyzing the cryptocurrency and blockchain environment will be reporting all the information to deputy governor Francoise Groepe.

 

Mr Groepe explains:

“Given the rapid developments in financial technology it is evident that we are potentially facing one of the most severe innovation and technology-driven disruptions to products and services, particularly in the financial sector space.”

 

It will be important to follow what the SARB will be doing. It will not be good for South Africa to keep waiting to regulate cryptocurrencies. Some countries are implementing a legal framework that is helping them to receive an increased amount of investments.

 

“We as the SARB favour a ‘back to basics’ approach,” he explains. “Regulators should focus on regulatory principles that are risk-based, rather than creating excessive rules-based regulations aimed at these technologies or products.”

 

As we wrote some days ago, the South African Revenue Service (SARS) has unveiled bitcoin tax plans for South African investors. According to a statement released on April the 6th, the SARS will continue to apply normal tax rules to cryptocurrencies. Moreover, the agency expects that investors will declare gains or losses as part of their taxable income.

 

South Africa is working in a regulatory framework related to blockchain technology and cryptocurrencies that will attract enterprises to settle their operations in the country. The African country has an enormous potential in terms of technology and human resources. At the same time, it has a very active community in the cryptocurrency world. The correct regulations will increase the potentialities of this flourishing market.

 

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Carlos Terenzi

I have a Bachelor’s Degree in International Relations and I write about Cryptocurrencies and European Politics. I live between Buenos Aires and Wroclaw.