South African Treasury on Crypto Regulations – The South African Treasury has said it anticipates the recommendations to add crypto asset service providers as accountable entities in the Financial Intelligence Centre (FIC) Act to be approved this year
South Africa is attempting to address the Financial Action Task Force’s assessment of “severe shortcomings in the country’s anti-money laundering and counter-terrorist financing procedures” with the proposal to regulate crypto service providers.
The proposed modifications, which have been open for public comment since June 2022, will bring the FIC Act in line with the FATF’s criteria, according to the South African Treasury’s current budget review report.
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“This reform would address concerns about money laundering and terror risk financing through crypto-assets, as well as align the act with the FATF’s guidelines for virtual assets and related service providers,” the Treasury said in its budget review statement.
The Treasury’s new comments on crypto assets come after the Intergovernmental Fintech Working Group (IFWG) produced a position paper calling for crypto asset regulation many months ago. As noted, the IFWG stressed that this call did not imply that it was embracing cryptocurrencies.
Crypto Assets as a Financial Product
Meanwhile, the Treasury anticipates crypto assets to be classed as financial goods under the Financial Advisory and Intermediary Services Act, according to the budget review report (FAIS). The purpose of this declaration, according to the Treasury, is to protect consumers.
The following is an excerpt from the document:
Any individual offering advisory or intermediary services linked to crypto-assets must be recognized as a financial services provider under the act and must adhere to the act’s requirements. Crypto-asset exchanges and platforms, as well as brokers and advisors, will be included. This project is scheduled to be completed in 2022.
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South African Treasury on Crypto Regulations – In addition to changing existing regulations, the review document indicates that work is being done to have crypto assets regulated under the country’s 1961 Exchange Control Regulations.
The IFWG will issue a follow-up research on stablecoins later this year, focusing on the risks posed by the assets, according to the document. The South African Treasury is also looking into measures to “control electricity-intensive crypto mining,” which it claims is “environmentally detrimental,” according to the document.