This is feedback from Luno’s country manager for South Africa, Christo de Wit, who told Daily Investor in an interview that the country’s regulators have moved far quicker than their peers.
“I think there initially was a lot of confusion, and a lot of people did not understand, you know, what cryptocurrencies and what Bitcoin was,” De Wit said.
However, research from the Financial Sector Conduct Authority (FSCA) revealed that South over 5.8 million South Africans own crypto assets, with Bitcoin being the most popular.
“I don’t think that by any means crypto is in the mainstream yet, but it is growing strongly in South Africa, and this will only accelerate in the coming years,” he said.
De Wit said widespread adoption of cryptocurrencies will first come as a result of it being used as an alternative asset class in which South Africans can invest.
This perception is key to getting a majority of South Africans to hold, invest in, and interact with crypto.
The driving force behind this shift in perception is the declaration of crypto as a financial product by the FSCA in October 2022 and the creation of a regulatory framework around it.
De Wit explained that South Africa’s regulators have taken a proactive approach with regard to crypto and have engaged with the sector for several years.
Licences from the FSCA are pending for several crypto providers, including Luno. De Wit expects an announcement to be made soon regarding the awarding of licences.
The FSCA and other financial regulators have not clamped down on crypto as some of their international peers have.
De Wit said the approach of banning crypto mining and trading is counterproductive as all it does is push crypto activity into the black market with no oversight.
However, a clampdown is coming following the release of the FSCA’s Crypto Asset Market Study.
“It will place us in a position where we know how we could respond in terms of our regulatory frameworks, licencing of products, and supervision,” the head of the regulator’s fintech division, Awelani Rahulani, previously said.
Rahulani emphasised that the crypto trading industry is still small compared to the traditional finance sector.
However, this does not mean that the industry does not pose a risk to financial stability as crypto products are used by ordinary South Africans who also engage with the broader economy and traditional finance sector.
“This has put us in a position whereby we have to put measures into place to make sure that we are about to regulate and monitor this space very closely,” Rahulani said.
“There has been a movement away from a ‘wait and see’ approach to more active regulation. We plan on regulating the space,” Rahulani said.
“We are monitoring the sector very closely and definitely have the enforcement within the organisation.”
De Wit urged regulators to focus on protecting consumers and tackling bad actors rather than taking a staunch approach to regulating the sector.
This article was first published by Daily Investor and is reproduced with permission.