Bitcoin regulation in South Africa – What you need to know

South African cryptocurrency exchanges are prepared for upcoming regulation, with Luno, VALR, and iCE3X stating they are in discussions regarding the future of cryptocurrency regulation in the country.

Currently, the South African Reserve Bank (SARB) has implemented a progressive approach to the regulation of cryptocurrencies, clamping down on its unscrupulous use.

Luno Africa general manager Marius Reitz stated that the SARB is expected to announce new cryptocurrency regulation proposals in the first quarter of 2020.

“Luno welcomes regulation and is working with the SARB and other regulators around the world,” Reitz said.

“We believe it will provide consumers of crypto with the comfort that the service they are dealing with is held to defined regulatory standards.”

Both Luno and VALR operate as if they are regulated, despite the lack of local regulation for cryptocurrencies.

Regulation around cryptocurrency and blockchain technology remains relatively undefined in South Africa, as in many other countries around the world.

In January 2019, the South African Intergovernmental FinTech Working Group – composed of the SARB, FIC, FSCA, SARS, and National Treasury – issued the Consultation Paper on Policy Proposals for Crypto Assets.

This paper aims to provide a regulated path for crypto-asset service providers in South Africa, including major exchanges.

In June, The Financial Action Task Force – of which South Africa is a member – also issued its “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers”, which provides a regulatory framework for the cryptocurrency industry.

FNB crackdown and outlook

Recently, however, FNB stopped providing banking services to cryptocurrency exchanges – stating that it would close the bank accounts of local exchanges.

VALR co-founder Farzam Ehsani said their exchange was in discussions with FNB regarding the exact date of termination, but they were not concerned about a similar reaction from other local banks.

“We will communicate this date to our customers in advance to ensure a seamless transition to our other banking partners, some of whom are already enabled on the VALR platform,” Ehsani said.

Ehsani told VALR customers who bank with FNB that they may have to wait longer for their deposits to reflect in VALR’s system, as the exchange would no longer have an FNB account to receive deposits.

Ehsani also told MyBroadband that VALR is encouraged by discussions with South African regulators and other banks that FNB’s decision remains an isolated case.

Eugene Etsebeth from iCE3X said they are committed to working with regulators and continually give them guidance and expertise when asked.

“Regulatory clarity is a boon for consumers who are tentative to invest in cryptocurrency,” said Etsebeth.

Exchanges which spoke to MyBroadband said they hoped FNB would revise its decision once the local regulations on cryptocurrency were clarified further.

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Bitcoin regulation in South Africa – What you need to know