Crypto assets are to be treated as financial products in South Africa, to make it easier for regulators to monitor the market and help to safeguard consumers.
The Financial Sector Conduct Authority defined crypto assets as “a digital representation of value” in a gazette notice published on Wednesday.
A crypto asset isn’t issued by the central bank, but can be traded, transferred or stored electronically for purposes of payment, investment or other forms of utility, according to the announcement.
The declaration, which takes effect immediately, comes as governments around the world push to regulate cryptocurrencies to protect users from turbulent digital coins and fraudsters. US regulators and lawmakers are studying ways to guide the operation of stablecoins.
In South Africa, where Global Web Index estimates about 15% of the population invested in bitcoin in 2020, the nascent industry already saw collapses, including the demise of Mirror Trading International last year with losses totalling about US$1.2-billion.
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The South African Reserve Bank has been working with other regulators to recognise the coins as financial products in order to make them easier to monitor from a money laundering and terror-financing perspective. — (c) 2022 Bloomberg LP