In what the government has referred to as a ‘phased and structured’ regulation of cryptocurrencies, South Africa is now clamping down on crypto assets after being hit by two major scams in 6 months.
Transfer of locally-acruired cryptocurrencies to overseas crypto exchanges in South Africa will now be subject to the country’s exchange control regulations As a result, transactions in which a person buys crypto assets in South Africa and uses them to externalize “any right to capital” will be considered a criminal offense.
This new ban followed Ameer and Raees Cajee, the founders of South Africa’s largest cryptocurrency exchange, Africrypt have vanished, along with nearly $3.6 billion in Bitcoin, after telling investors the exchange had been hacked. About 69,000 BTC in total has gone missing from the firm. While they were worth $3.6 billion at the time of their disappearance, with recent drops, the value of that wallet currently stands at just under $2.4 billion.
“We are of the view that cryptocurrencies are risky and we want to ensure that the financial sector is aware of those risks and pricing for those risks properly.” Said Kuben Naidoo, CEO of the Prudential Authority, which regulates the country’s banks and insurers.
The country’s Intergovernmental Fintech Working Group, or IFWG, under the aegis of the Crypto Assets Regulatory Working Group, has now laid out a roadmap for introducing a regulatory framework that will center on crypto asset service providers.