New rules proposed by the South Africa Central bank may mean that crypto exchanges and wallet providers will have to register with regulators.
The South Africa Reserve Bank (SARB) released a consultation paper on Wednesday which said that regulatory action on crypto assets will need to be prioritised to protect consumers and investors. The bank stated that many individuals are left vulnerable due to present the lack of regulation.
The bank plans to review existing rules to determine how they can be applied to crypto assets.
SARB states, “The phased approach, starting with the registration requirement, could lead to formal authorization and designation as a registered/licensed provider for crypto asset services operating in South Africa at a later stage,”
The central bank also recommended that crypto assets should remain without legal tender status and should not be recognized as electronic money in its proposal.
The bank expects registered crypto entities to report suspicious and unusual cash transaction of 25,000 South African rand (or $1,820).
The consultation paper is open for public comment until February 15.
The best course of action for exchanges to take may be to register. Registered exchanges will , of course have to keep in mind that they are under greater scrutiny. Exchanges may be best served by taking significantly higher steps to establishing internal controls and refinement of compliance processes as regulatory pressure increases.