South Africa’s Financial Conduct Authority Plans To Implement Framework To Protect Cryptocurrency Investors At Risk: Report
“We want to be able to intervene if we think potential customers have high-risk products that they don’t understand,” says Unathi Kamlana.
Unathi Kamlana, commissioner for the South African financial sector regulator, reported that the government’s implementation of a crypto framework will aim to mitigate potential risks.
According to a Bloomberg report on Friday, Kamlana said financial regulators plan to introduce a regulatory framework as early as 2022 to protect investors from “potentially high potential” in crypto assets. The commissioner said that any framework for cryptocurrencies would be put in place in coordination with the Prudential Authority and the Reserve Bank of South Africa’s Financial Supervisory Board.
“We want to be able to intervene if we believe that potential customers are being offered products that they don’t understand pose a potentially high risk,” says Kamlana. “We have to be very careful that we don’t just legalize them.”
The FSCA commissioner’s comments follow South Africa’s intergovernmental fintech working group, which said in June that it would lay the groundwork for “phased and structured” regulation of cryptocurrencies in the south. The African country’s policies on cryptocurrencies are largely non-disruptive, but it is also intended to warn the public that there is little protection or recourse by the government against fraud or scams.
When the co-founder of South African crypto investment platform AfriCrypt allegedly went missing with billions of dollars in user funds, the FSCA said it was incapacitated because crypto assets were not regulated in the country. After receiving the warning, the major crypto exchange Binance also questioned the authority of the FSCA as South Africa’s financial regulator, instead arguing that their Financial Intelligence Center ensures the country is ensuring that crypto companies comply with local laws.
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In May, the Reserve Bank of South Africa launched an exploratory study on the introduction of a central bank digital currency (CBDC). The central bank is also part of a pilot program with banks in Australia, Singapore and Malaysia to test international settlement with CBDCs.