South Africa Becomes The Next Country to Crack Down on Crypto

The South African Reserve Bank (SARB) will be releasing a “policy paper” regarding Bitcoin (BTC) and the cryptocurrency industry as a whole in the coming months, possibly laying the foundations crypto regulations and cracking down on unlicensed companies.

According to a report by Business Insider’s South Africa branch, the policy paper will most likely provide more detail on the procedures the wallet providers and crypto startups, such as crypto exchanges will have to go through to get registered with local regulators. SARB has stated that its new registration system will be of much help in regulating the new crypto industry, improving the security and protection for consumers and investors alike.

Service providers will also be mandated to comply with anti-money laundering systems, along with reporting and monitoring suspicious transactions, drawing attention to 25,000 Rand+ ($1,800 U.S Dollars) transactions as an example of something deemed questionable.

Although the regulations and policy papers might make it look like the South African government is anti-crypto, they insist that they are not. In a consultation paper made for SARB’s role in the Intergovernmental FinTech Working Group (IFWG), the bank praised this new innovation, accepting that crypto is the next step forward in the FinTech realm. However, SARB’s scepticism hasn’t fully gone away, with it revealing that it is still wary about how cryptocurrencies pose a risk to investor protection.

The development comes days after the European Securities and Markets Authority (ESMA) also expressed their views on the nascent crypto industry. The advisory committee published an in-depth report on the crypto industry market in Europe, warning about the risks involved with cryptocurrencies like Bitcoin.

Notably, the issues pointed out by the ESMA included market volatility, fraud, money laundering, market manipulation, and multi-million dollar cyber-attacks.

Additionally, ESMA’s analysts have explained one pressing issue with the currency cryptocurrency market – liquidity. While the traditional stock markets have enough liquidity that most investors can cash out if things look bleak for the company they have invested in, the liquidity of crypto markets is exceptionally shallow. This means that investors will have a hard time “cashing out” their investments if the company’s businesses aren’t up to their expectations.

The report said,

“These issues are not unique to crypto assets trading platforms they may be exacerbated in the case of crypto-assets because of their high price volatility and often low liquidity.”

It seems 2019 is going to be the year of crypto regulations, and it remains to see how this affects the new industry.