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South Africa has introduced stricter rules for crypto traders – and it’s causing headaches

Cryptocurrency remains a concern for governments and regulators around the world as its novelty, diversity and accessibility have been scrutinized by fiscal authorities and its volatility has exposed investors. ..

The Treasury recently released a report evaluating South Africa’s anti-money laundering and counter-terrorism financing measures.

A joint effort between the Financial Action Task Force (FATF) and anti-money laundering groups in eastern and southern Africa, the report shows that South Africa has major flaws in the regulation of crypto assets, especially crypto asset service providers (CASPs). I made it clear.

Why regulate crypto space?

Cryptocurrency regulation is not a popular concept among investors, said Thomas Lobban, Legal Manager for Cryptocurrency Taxation at Tax Consulting SA. “Anonymity and freedom still show the appeal of cryptocurrencies, but these volatile assets have proven to require regulation,” he said.

“This is not only for the overall benefit of the economy and Fiscus, but also to protect people from the dangers associated with crypto investment.”

Despite numerous reports of fraud, MTI Holdings was the first to hit crypto credibility in South Africa, Roban said.

“It is estimated that MTI Holdings and its executives have earned R9 billion, as the CEO has not yet taken action and the FBI is supporting the investigation.

“The next blow happened in April when the Cajee brothers of Africrypt, a Durban-based crypto trading platform, disappeared at an estimated Rant 50 billion in Bitcoin. They remain large.”

The shockwaves of these scams renewed the urgency of a regulatory framework covering crypto asset platforms, but their implementation seems slow and somewhat misdirected, Roban said. rice field.

Dullness leads to overreaction

Standard Bank recently issued an account closure notice on a crypto trading platform that provides arbitrage services. Cryptographic arbitrage is the process of buying digital assets at a low price in one jurisdiction, selling them at a premium in another jurisdiction, and taking advantage of price differences between markets.

Rumor has it that the South African Reserve Bank is heating up by forcing banks to over-regulate crypto space, according to Roban.

“This exercise takes place after the news that the South African Reserve Bank has blocked the purchase of cryptocurrency debit and credit cards from offshore exchanges. At first glance, it is correct for cryptocurrency regulation from an exchange control perspective. I’m not sure if it’s heading in the direction, but it seems like a solid step.

“The Reserve Bank does not seem to be able to explain the rationale behind publishing (and implementing) this restriction without changing the actual regulation.”

Tax Consulting South Africa said it has contacted SARB to clarify why offshore purchases of cryptocurrencies from debit or credit cards are blocked.

“Their reaction was that South Africans could buy from a local CASP using a credit or debit card, but not from an offshore CASP,” Lobban said.

In an email exchange, SARB representatives replied, citing B.16 (A) of the Currency Exchange Manual for Authorized Dealers (CEMAD). It states that transactions using credit and debit cards are permitted. Subsections (D) and (E). Sections B.16 (D) (i) apply only to South Africans who are “traveling”. This means you can swipe while traveling.

Sections B.16 (E) (i) allow small foreign currency transactions over the Internet. This means that you can swipe online, but you cannot buy a Spanish villa by card trading. There is no mention of cryptography in these regulations.

However, it included:It should be noted that the purchase of crypto assets from a foreign crypto asset service provider (CASP) is not within the scope of Section B.16 (E) (i) of CEMAD...

“There was no explanation as to why it wasn’t allowed. It raises questions about the purpose of this restriction,” Roban said.

“FinSurv also warned that transferring cryptography from South Africa to other countries is a criminal offense, according to the FAQ on the SARB website. This causes a lot of confusion among investors. “

Art of confusion

Cryptocurrency assets are transactions that are reflected in a distributed (borderless) ledger. Roban pointed out that they are rarely kept in a single jurisdiction at any given time unless they are refrigerated or stored in a similar format.

“If exactly the crypto assets are in South Africa or other jurisdictions, it has not yet been revealed. Therefore, in many cases it is not possible to fully understand whether crypto investors are in compliance with the law. Yes, SARB seems safe to leave investors to this uncertain mindset.

“The general theme is that the government is trying to quell or limit foreign crypto investment by South Africans, rather than trying to educate those who understand it and are actively trading.

When asked for further clarification or legal reference as a country’s financial authority, the South African Reserve Bank does not appear to be able to identify how its policy-making identification fits into current regulations. , Roban said.

“No action has been taken to address the concerns of South African crypto investors, not to mention the uncertainty they are sketching for CASP.

“Until more clarified by regulatory agencies, crypto investors should aim to keep up with changes in the regulatory environment.”


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South Africa has introduced stricter rules for crypto traders – and it’s causing headaches

Source link South Africa has introduced stricter rules for crypto traders – and it’s causing headaches

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