The financial authorities of South Africa are now looking for comments on a proposed policy that could enact changes that would offer more regulatory certainty in the country. This happened soon after the South African Reserve Bank (SARB) and the National Treasury decided to overhaul the current system that is being used in the country, the NPS (National Payment System).
The NPS was originally a set of arrangements and frameworks that created the infrastructure that enabled people to transfer funds between individuals and entities in South Africa. The NPS goes back to the National Payment System Act 78, which it was created in 1998. The key to the change is that this system was very outdated due to the evolution of the technology in the last two decades.
Because of this, the main idea is that a review of this system will bring the whole financial system up to date and, as cryptocurrencies are being discussed in most of the world right now and their potential for changing the industry and regulation are popular subjects, some people believe that South Africa will regulate them too during this.
They are previously unregulated in the country and the new legislation could help to align the country in a certain way that services would be allowed by the new laws and their service providers could start a legitimate business in the country.
The South African Reserve Bank and the National Treasury have the opinion that only reviewing the whole system they would be able to achieve a continued efficiency and the safety of the national payment system.
According to a joint statement made by the two institutions this week, the payment industry is constantly innovating and creating new technology to become more efficient. Because of these developments, the country also needs to become more advanced in the technology that it accepts and regulate the new emerging technologies.
They believe that some of these new services (without citing cryptos exactly) are a challenge to regulate and that they have become prominent enough so that the government has to take some attitude about them.
The two governmental entities have affirmed that they will accept new comments up until they decide in February what should be done next.
It is important to perceive that South Africa actually has a very progressive view of cryptos, especially when compared to its neighbors. Countries like Zimbabwe have a very anti-crypto stance while the country is neutral, at worst.
South Africa avoided banning cryptos during the panic that happened in 2018 when many countries, like India, which banned banks from offering services to crypto exchanges, did it, so we have a good feeling about the new regulation of the country.
The SARB has already affirmed that crypto companies should self-regulate and that regulating cryptos too much could cause an unintended effect before. According to the bank, if the cryptos were regulated in a premature way, the negative consequences could have been very big.
However, they also believed that it would be a fairly better idea to wait until the industry had grown and then only decided how to help to grow and achieve some stability.
Now, it looks like the plan will not pan out exactly as expected because the government will have to make a wide regulative effort and cryptos cannot be put aside when such a big change happens, so it looks like they will be regulated.
Fortunately, the stance of the government might not be very negative and they will regulate the industry well, but we will have to wait and see.