South Africa to protect investors against highly risky cryptocurrencies
Unathi Kamlana, who is the commissioner of the South African Financial Conduct Authority, has talked about the government’s launch of a crypto framework that would be aimed at mitigating any potential highly risky cryptocurrencies.
According to a report from Bloomberg on Friday, Unathi Kamlana said that the financial regulator intends to introduce a regulatory framework starting in early 2022, which is designed to protect investors from “potentially highly risky” cryptocurrencies. He also said that any framework for crypto would be created in coordination with the Prudential Authority and the Financial Supervisory Board of the Reserve Bank of South Africa, according to Cointelegraph.
“What we want to be able to do is to intervene when we think that what is provided to potential customers are products that they don’t understand that are potentially highly risky,” Kamlana said.
“We must be very careful to not just legitimize them.”
FSCA and highly risky cryptocurrencies
The comments made by the FSCA Commissioner follow the South African Intergovernmental Fintech Working Group, which said in June that it would lay the groundwork for a “phased and structured” cryptocurrency regulation in the country of South Africa. The African nation’s policy on crypto was largely one of non-interference, but also a warning to the public that there was little protection or recourse from the government in the potential cases of scams or fraud.
When the co-founder of South Africa’s crypto investment platform AfriCrypt disappeared with billions of user funds, the FSCA said it could not take action because highly risky cryptocurrencies assets were not regulated in the country, at that time. Following the warning, Binance, one of the world’s largest cryptocurrency exchange platforms, also challenged the FSCA’s authority as South Africa’s financial regulator, arguing instead that the country’s Financial Intelligence Center had already made sure that cryptocurrencies complied with local laws.
Earlier this year, in May, the Reserve Bank of South Africa began an exploratory study on the launch of a central bank digital currency, or CBDC. The central bank is also part of a pilot program with those in Australia, Singapore and Malaysia in order to test international regulations using CBDCs. While there is a lot more space for growth in the crypto markets in Africa, it is certainly reassuring to see that people are deciding to take action, and at least bring forward the elephant in the room – the discussion on crypto and how everything surrounding the markets should be handled.
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