Authorities in South Africa are seeking comments on projected policy changes that might, among different things, provide cryptocurrencies regulatory certainty.
Per the South African Reserve Bank (SARB) and therefore the National Treasury, an overhaul of the national payment system (NPS), a set of infrastructures and arrangements which permit the transfer of funds between people and entities, is required because the legislation backing the system, the National Payment System Act 78 of 1998, is out-of-date.
A review is will, however, align the legislation with the worldwide trend as well ensure that the regulatory net covers sectors of the economy that were previously unregulated such as the cryptocurrency space:
"[Seeks to] Allow/enable new or unregulated service providers, services, systems and instruments (e.g. virtual currencies, distributed ledger technologies and fintech companies)” one of the recommendations created reads.
Efficiency and Safety
According to the SARB and the National Treasury, it's only through a review that the continued potency and safety of the national payment system are assured.
"As the payments industry moves towards a digital age and becomes more and more innovative, and financial technology becomes a lot of advanced, the emergence of new payment strategies, technologies, services, risks, participants and ‘payment systems’ have become increasingly prominent and challenge the traditional payments regulatory landscape,” the South African Reserve Bank and the National Treasury wrote in a joint statement.
Comments will be welcomed by the two institutions till the end of February next year.
Compared to other African countries like Zimbabwe that have taken an outrightly harsh anti-cryptocurrency stance, South Africa has been fairly progressive with regards to digital assets. Earlier within the year, once authorities in a couple of jurisdictions were putting bans on cryptocurrencies, Africa’s most industrialized economy avoided a knee-jerk reaction and the country’s central bank instead founded a team tasked with monitoring cryptocurrencies.
Unintended Consequences
As CCN reported at the time, SARB most well-liked self-regulation in the sector. An official of the apex bank at the time argued that regulating cryptocurrencies might result in adverse effects:
"Regulating cryptocurrencies prematurely might have the negative consequence of throttling the expansion and innovation of the industry. Additionally, if laws are drafted based on existing technology, that remains in its growth phase, there's a risk that the technology could have moved such a lot by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the newest technology.”
The reserve bank of south africa has also embraced distributed ledger technology with its Project Khokha – a blockchain platform designed on the Ethereum blockchain for processing interbank payments and settlements. 3 months past, Project Khokha won the most effective Distributed Ledger Initiative at a global central banking forum.
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