In the first quarter of this year, the SA Reserve Bank (Sarb) is due to publish a policy paper on how providers of e-wallet and other services around crypto-currencies could be required to register with the government.
Such registration will be intended to help protect investors and users of the likes of bitcoin – but will also make it easier to enforce tax and other laws when it comes to what the Bank likes to call "crypto-assets", because it does not deem them currencies.
And it would de-anonymise bitcoin transactions, making service providers responsible for tracking who does what with the digital tokens, much like banks are required to know their customers.
The Sarb this week published a consultation paper on the regulation of such tokens as part of an Intergovernmental FinTech Working Group (or IFGW), which includes the National Treasury, the SA Revenue Service (Sars), the Financial Sector Conduct Authority (FSCA) and Financial Intelligence Centre (FIC).
The group accepts the reality of crypto-assets as an important fintech innovation, but is concerned about investor protection especially in the wake of increased volatility, liquidity risks, fraud and hacking incidents.
The group acknowledges that crypto-assets may perform similar functions to those of securities and commodities, and says South Africa does not intend to ban their trade. But monitoring the currently unregulated sector is very much on the cards.
The IFGW is proposing a set of regulations to protect crypto-assets investors – and help keep an eye on decentralised digital tokens, that include subjecting crypto-asset service providers to registration. This "could lead to formal authorisation and designation as a registered/licensed provider for crypto-asset services operating in SA."
The registration requirement will also apply to crypto-asset payment providers: wallet providers like Luno and entities that provide software that enable the storage of crypto-assets.
Crypto-asset providers would be required to comply with anti-money laundering rules – which for banks include identifying customers and knowing their addresses.
Those service providers would also have to monitor and report suspicious transactions, such as cash transactions of R25,000 and more.
The paper is open for public comment until 15 February 2019 via email to SARB-FINTECH@resbank.co.za.
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