South African treasury planning to regulate south Africa crypto mining and Digital assets regulations 2022


The National
South African Treasury plans to regulate South Africa’s crypto-mining sector
and crypto-assets. Amendments to the country’s financial laws are expected to
include the proposal of crypto-asset service providers as accountable institutions which
will be finalized in 2022.
South Africa is
focussing to address the issue of “significant weaknesses in the country’s
anti-money-laundering and counter-financing of terrorism systems” by regulating
crypto service providers that were identified by the Financial Action Task Force (FATF). The South African Treasury said this crypto asset proposal will
be included within Financial Intelligence Centre (FIC) Act. This move will address
concerns related to money laundering and terror risk financing through crypto
assets. The proposed amendments to the act were published in June 2020 for
public consultation and will be finalized by 2022. Treasury proposes amending
the FIC Act to align it with the FATF's standards, explaining that public input
has been open since June 20, 2022.
Recently the Budget Review published where Treasury disclosed about exploring
measures to regulate electricity-intensive crypto mining which is
environmentally harmful. The treasury also expects to see crypto assets being
declared as financial products under the Financial Advisory and Intermediary
Services Act (FAIS). As a result of this declaration, anyone offering advice or
intermediary services related to crypto-assets needs to be recognized by the
law as a financial service provider. This will include brokers, advisor’s
crypto-asset exchanges, and platforms.
“Following the
review of a wholesale digital central bank currency or digital cash, the second
phase of this project explores digital financial assets based on distributed
ledger technology and the use of digital money to settle payments. “It
highlights the potential impact of this technology and digitalization on financial markets, and clarifies the relevant operational, legal and policy
questions around a potential change.”
The project findings will be published in April 2022, according to the announcement. Additionally, it plans to publish a paper to address the risks posed by so-called stable coins. A stablecoin is designed to have a value that is more fixed than normal cryptocurrencies. Since they are pegged to other assets, like the dollar or gold, they tend to fluctuate. The Intergovernmental Fintech Working Group (IFWG) issued a crypto asset guidelines document through the Crypto Assets Regulatory Working Group (CAR WG). The paper confirms that crypto assets will be brought into the South African regulatory purview in a phased and structured manner.

Indrani bose
CBW - External Analyst
INDIA