Minister Proposes Placement of Embargo over Pension Funds Spending On Crypto Investment
Enoch Godongwana, who is the Finance Minister in the Government of South Africa has put forward a proposal that seeks to the placement of an embargo over the pension funds spending for crypto investment. The proposal comes with a 12th November 2021 deadline within which time, the Government should seek public consultation, comments, and opinions on the draft proposal. In short, the proposal aims at banning investments in digital currencies, stablecoins, NFTs, and CBDCs from the pension funds subject to its passing.
South African Finance Minister, Enoch Godongwana has prepared a draft proposal which he wants the Government to consider immediately. Godongwana’s proposal relates to the pension fund in which he wishes to implement a ban over the pension funds specifically for crypto investment. The proposal has been submitted by him to the Government and a deadline for public consultation/comments has also been set up as 12th November 2021. Godongwana is of the view that considering the urgency in the matter, the proposal should be passed and implemented before 2021 ends.
At present, any pension funds in South Africa is permitted to invest funds as an investment. The permission is also available to such pension funds even if the money is being used for investing in digital assets. However, there is a certain fund spending limit for digital currency investment which is @ 2.5% of the assets owned by a pension fund. However, if Godongwana’s law is implemented then automatically the limit of crypto investment from the pension funds will be removed. Instead, funds wouldn’t be permitted anymore to utilize the funds in any investment relating to digital assets because it will be banned.
It has been specifically mentioned in Godongwana’s proposal that none of the pension funds in the country would be permitted to invest in crypto. Every type of crypto investment, whether directly or even indirectly, would be unauthorized under the law.
The draft proposal further wants to include stablecoins as well as NFTs in the definition of “digital assets”. This would mean that the pension funds’ money cannot be used for investment in either digital assets, stablecoins and/or NFTs. The language of the draft also suggests that the funds cannot be utilized further for investing in any digital currency which though is backed by any central bank. Certainly, here the law is talking about Central Bank Digital Currency i.e. CBDC.
Godongwana’s draft proposal has come in the time when the South African Government is looking to regulate the digital industry. As has been the case with most of the countries, South Africa too is trying to regulate cryptocurrencies under the garb of “public protection”. Though the crypto regulations are not finalized yet, but various provisions of the future law talk about “public and investor protection”.
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Text source: Coinfrog
