more than 10,000 unique crypto assets are currently being offered in the market. “Global daily trading values have also increased significantly over the past few years, currently averaging in excess of $200-billion, and on some days exceeding $400-billion,” she said. “While crypto assets’ viability as a widely used means of payment remains untested and an open question, the market has demonstrated significant resilience over the last decade. The use cases for crypto assets as an alternative – albeit highly speculative and risky – investment class and as a cross-border remittance instrument, appear to be gaining some traction among retail customers.”
Therefore, the IFWG made several recommendations for a phased-in regulatory approach, including a proposal to establish legislative requirements for crypto asset service providers in order to combat money laundering and terrorist financing. It would require these service providers to register with the Financial Intelligence Centre (FIC), conduct verification and due diligence on clients, keep record of their transactions and monitor and report any unusual or suspicious activity, including transactions amounting to R25, 000 or more.
In January this year, daily trading of crypto assets in South Africa exceeded R2 billion for the first time. Despite increasing daily trading and growing value, the South African Reserve Bank does not have any powers to require crypto asset service providers to report transactions at the moment, since the bank’s current exchange control regulations do not cater for digital currencies.
According to experts, this could lead to the creation of unregulated parallel systems. “This could continue to prevent authorities from having ‘line of sight’ of crypto asset-related activities and developments,” Matshane said. “By gradually bringing crypto assets into the South African regulatory purview, the most pertinent and immediate risks … around the financing of terrorist activities, cross-border financial flows and consumer protection will be addressed.”
