Reports from South Africa has it that the South African government are looking at censoring cryptocurrency transactions by criminalizing the transfer of crypto-assets bought in the country to cryptocurrency exchanges oversea.
The South African regulators issued the warning through the Intergovernmental Fintech Working Group (IFWG) which recently leaded a published a frequently asked question (FAQ) document containing its position on cryptocurrencies.
Comprised of seven organizations such as the Competition Commission, Financial Intelligence Centre, South African Revenue Service, Financial Sector Conduct Authority, National Treasury, National Credit Regulator, and the South African Reserve Bank, the IFWQ in its publication said:
“Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is without permission from National Treasury, direct or indirectly exported from South Africa”.
The Intergovernmental Fintech Working Group (IFWG) in the document in response to the question if crypto assets or currencies can be bought in the country and transferred to a foreign or offshore cryptocurrency exchange, it said:
No. Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is, without permission from National Treasury, directly or indirectly exported from South Africa. This includes transactions where an individual purchases crypto assets in South Africa and uses them to externalize ‘any right to capital’. Contravening these regulations is a criminal offence.
According to the South Africa exchange control regulation, contravening this law carries a penalty of up to five (5) years imprisonment and a fine of $17,500 (R250,000).
Reports from local media has it that none of the major cryptocurrency exchanges have addressed the publication yet, however, Luno’s local boss, Marius Reitz, General Manager for Africa said that the intent of the IFWG publication is to bring under the South Africa’s regulatory framework cryptocurrencies, how it will be implemented and regulated seemed unclear.
Marius Reitz said that “Luno is supportive of clear and market-conducive regulations for the crypto industy”….and that Luno has engaged with the Reserve Bank extensively on the practical challenges posed by applying the country’s existing exchange control regulations to cryptocurrencies. We ‘look forward to continuing to work together to ensure regulations are fit for purpose’ Reitz added.
The Luno General Manager is of the opinion that a step by step approach towards the implementation of regulation in the crypto space is the best approach which will help to mitigate any potential negative implications of the regulation. He holds the preference over whole or onetime regulations which could stifle innovation and negatively impact the growing industry.
“A phased approach to implementing regulation for the crypto industry in South Africa – beginning with mandatory AML/KYC obligations – is a sensible approach which will assist in mitigating any potential negative implications of regulation” – Marius Reitz
CEO of Altcoin, Richard de Sousa hasn’t said much about the papers published by the IFWG other than they are looking at the document to ‘consider many things’.