South Africa accelerating Crypto Regulation After Scams skyrocket

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South Africa is accelerating its push to regulate crypto assets after being hit by two scams this year,

According to Bloomberg, a new regulatory timeline foresees finalizing a framework in three to six months, after the publication of proposals earlier in June that requires public comment before approval, according to Kuben Naidoo, chief executive officer of South Africa’s banking regulator known as the Prudential Authority.

“We are trying to put in place the regulatory framework quickly. Our view is that crypto is a financial product and should be regulated as a financial product.”

Kuben Naidoo, Chief Executive Officer of South Africa’s banking regulator known as the Prudential Authority.

South African cryptocurrency service providers have been operating unchecked by regulatory powers even as the popularity of the asset class has taken off. Last year, the collapse of Johannesburg-based Mirror Trading International was called the biggest crypto-related scam of 2020 by blockchain data platform Chainalysis.

Regulators in South Africa will first move to establish know-your-customer rules for crypto exchanges and create systems for the surveillance of the asset class in order to prevent money being laundered out of the country, Naidoo said. Thereafter, investor-protection guidelines and rules for managing capital risk in the banking sector should come into effect.

Justice Minister Ronald Lamola said an inter-department working group that includes government agencies, the central bank and law enforcement is planning to “closely monitor the evolution of cryptocurrencies.”

Created to fight money laundering and terrorism financing, the entity recovered over 400 million rand ($28.1 million) in the last financial year, according to Lamola.

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