Officials of the South African Reserve Bank have furnished a consultation paper to regulate the so called “crypto assets”.
All crypto-service providers would be required to register themselves with the government, who is doing so to easily enforce laws and taxes and to protect customer rights.
Policy in the Making
The South African Reserve Bank (Sarb) is due to publish a policy paper that would supposedly deal with cryptocurrencies and digital assets in general, in the first quarter of 2019.
It has refrained itself from calling cryptocurrencies what they are and prefers to label them as “crypto assets”, clarifying its stance by saying that this enables authorities to formulate regulations and laws that would be helpful in dealing with digital assets.
The need for a policy, as stated in the paper, is driven by the following problems:-
- Crypto assets are a form of innovation that may impact the financial
sector of the country within the current regulatory framework.
- Crypto assets may create conditions for regulatory arbitrage while
- There is growing interest, investment and participation in crypto
- Crypto assets do not fit neatly within the current regulatory framework.
The bank hopes to completely de-anonymise Bitcoin transactions one day and wishes to incorporate it into its financial mainstream and as an alternative to the banking institutions in the country.
The paper serves as a perfect replica of the government’s tough stance on crypto transactions in light of factors such as price volatility, market illiquidity, widespread fraud, and cybercrime attacks, all of which have been have been on the rise in crypto markets worldwide.
An Eye on Crypto Firms
The government is very keen to keep a strict watch on crypto firms registering themselves to trade in crypto assets.
The new rules and regulations are bound to affect businesses, trades, and transactions, to name a few, that are primarily dependent on cryptocurrencies.
To top it all, crypto service providers would need to adhere to stringent anti-money laundering (AML) laws put in place by regulators, which could lead to collection of sensitive data of users and making it similar to what modern-day banks store on their centralized servers.
This is indeed against the very reason of existence of cryptocurrencies and blockchain technologies and could maybe suffer a backlash in some form or the other.