Wallet providers and cryptocurrency exchanges alike will have to register with regulators under rules proposed by South Africa’s Central Bank.
In a consultation paper published earlier in the week, the South African Reserve Bank said that regulatory action on crypto assets need to be prioritised to protect consumers and investors by saying that consumers are left at risk due to the fact that “sellers of crypto assets are not regulated.”
Discussing the possible regulatory approaches which could be taken, and by noting the “reputational risk” which is in the headlights if mistakes are made, the central bank proposes walking a middle line between doing nothing and stringent regulation or a ban.
The Central Bank has said:
“At this proposed level, an official body places specific requirements on providers of certain services in respect of crypto assets, without setting predefined conditions for formal authorisation to provide crypto assets-related products or services.”
With this, the bank suggests that a “useful starting point” for regulating the space would be the start of a registration scheme for crypto asset service providers such as crypto wallets and cryptocurrency exchanges.
This follows on with a review of the current regulations and how they can be put in the context of crypto assets with possible changes and new rules to added in the future. And finally a review of the regulatory actions implemented at that points.
The Central Bank went on to say, “the phased approach, starting with the registration requirement, could lead to formal authorization and designation as a registered/licensed provider for crypto asset services operating in South Africa at a later stage.”
On top of all this, the bank also made a recommendation that the crypto assets should remain without legal tender status and shouldn’t be recognised as electronic money in its proposal. In the first quarter of this year, there will be a detailed process for registration which is expected to be published. As reported by CoinDesk, crypto entities that are registered will need to report any unusual cash transfers of $1,820 and above according to the rules.
Back in April last year, the South African Revenue Service said that normal tax rules are applicable to crypto earning. They can be treated under standard income tax rules but they might be liable for capital gains tax in some cases.
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