Authorities in South Africa move to stiffen oversight of cryptocurrency assets after a proliferation of scams.
A new regulatory timeline foresees finalising a framework in three to six months, after the publication of proposals earlier in June that require public comment before approval, according to Kuben Naidoo, CEO of South Africa’s banking regulator, the Prudential Authority.
“We are trying to put in place the regulatory framework quickly,” said Naidoo, who’s also a deputy governor of the South African Reserve Bank. “Defining this as a financial product and then developing the regulatory framework is important.”
The approach that’s taking shape means tougher rules could be imminent this year after a jolt of scandals that most recently included a suspected Ponzi scheme, which resulted in the disappearance of an estimated US$3.6-billion in Bitcoin (though the quantum is disputed).
South African cryptocurrency service providers have been operating unchecked by regulatory powers even as the popularity of the asset class has taken off. Last year, the collapse of Johannesburg-based Mirror Trading International was called the biggest crypto-related scam of 2020 by blockchain data platform Chainalysis.
‘Risky’
“We are of the view that cryptocurrencies are risky and we want to ensure that the financial sector is aware of those risks and pricing for those risks properly,” Naidoo said. “We think it’s a market-conduct matter. It’s an investor-protection matter.”
South Africa is tightening the screws on the industry as digital currencies move from the periphery of the finance world to the mainstream and face deeper scrutiny worldwide.
In one of the most significant moves to date by a regulator amid a global crackdown, Binance Markets was banned on Sunday by the UK financial watchdog from doing any regulated business in the country. Huobi, one of the most popular cryptocurrency platforms in China, said on Monday that users in the country are prohibited from trading derivatives.
