September 27, 2022

FSCA Expected To Launch Crypto Regulations In South Africa Early Next Year

The financial regulators in South Africa, Financial Sector Conduct Authority (FSCA), have revealed that they will disclose a regulatory approach to the emerging crypto market at the beginning of 2022. A Commissioner at the FSCA, Unathi Kamlana, disclosed that the regulations would provide guidelines on the operation of cryptocurrency transactions. The Commissioner remarked that the commission was not inclined to approve products that posed a high risk to consumers.

He stated that the body hopes to step in when they feel the consumers are not properly educated about a project, which poses a great risk to the users. Commissioner Kamlana says that they have to exercise caution in regulations not to give them blanket approval.  The FSCA, according to reports, is cooperating with other regulatory bodies to create the regulatory framework. Reports reveal that they also plan to analyze the effect of crypto on financial stability.

The Commissioner’s Opinions

The Commissioner disclosed that he felt the financial services sector was not under threat from the cryptocurrency market at the moment. Kamlana added for clarity that the commission did not see cryptocurrencies as currency but as assets. The Commissioner, however, called for the government to brush off private cryptocurrencies and opt for central bank-issued stablecoins.

Kamlana urged interested investors to wait for the result of the South African central bank’s work. He believes that the stablecoin issued by the central bank will offer the best results. Kamlana says the central bank’s track record has the stability to foster confidence.

South African CBDC In The Works

In September of this year, The government disclosed that the South African Central Bank was running trials for its own Central Bank Digital Currency (CBDC). The Vice President of central bank engagements at Ripple, James Wallis, had said that the effort could spur other central banks to find solutions to the problems that plague traditional financial services today. The CBDC was touted as a cross-border payment solution.

International Payments And CBDC Race

The trials came not long after the Bank of International Settlements (BIS) announced a project in collaboration with some of the world’s central banks, that of South Africa Included. The project’s focus was to examine the effectiveness of CBDCs in international settlements.  The project was titled Project Dunbar.

Project Dunbar hopes to develop the required architecture to support cash transactions across borders using CBDCs. The project, if it succeeds, will eliminate the need for intermediaries in such international transactions. Additionally, it promises to make these transactions more efficient.

The Deputy Governor of South Africa’s central bank, Rashad Cassim, was delighted with the developments. He revealed that the South African apex bank ran these trials with years of research behind them. Cassim was pleased to find out that in other nations, central banks shared the prospect of cross-border payments with CBDCs. 

CBDCs have become hot topics in many countries around the world. China, at the moment, is looking like the closest to launching the technology amongst the G20. The suggestion by Kamlana to avoid private cryptocurrency sounds very similar to parts of the description in India’s proposed crypto bill that has led to a lot of speculation in India.