Cryptocurrencies have become more prevalent throughout Africa, with various governments creating legislation that acts in favour or against blockchain technologies. The South African Government is the latest collective to release its findings on this financial market. Named the Intergovernmental Fintech Working Group, these individuals announced that cryptocurrencies wouldn’t maintain a legally tendered status going forward. It should be noted that the IFWG contains members like the Financial Sector Conduct Authority, South African National Treasury, and South African Reserve Bank. All three entities would prefer to keep standard markets for their interests.
The Intergovernmental Fintech Working Group surveyed investors in the South African community. Their findings revealed that an exclusive 10.7% of the overall market is investing in BTC, making it unviable in comparison to standard markets. When looking at client acquisitions with South African-based exchanges, the numbers are considerably higher and range around 34.62% of the overall trading community.
Executive members in the South African investment community have mentioned that regulating this market must become a priority. Theses individuals have drafted legislation that could enact a secured & taxed framework. Licensing structures and financial oversight would be guaranteed under this drafted legislation. However, policy papers from these executives have been ignored by the Intergovernmental Fintech Working Group. Regardless of how the National Treasury, Financial Sector Conduct Authority, or South African Reserve Bank want, blockchain legislation will inevitably be required. Significant fallouts of standard markets could occur without some first or extensive law.
The Financial Action Task Force in South Africa, which was created by the government to oppose national banks, have joined forces with these executives. They’ll continue to manufacture new technologies with anti-money laundering protocols. Domestic oversight will be considered, as will the taxation of consumers. Through these conditional factors, the FATF can inquire regulatory legislation for the blockchain market.
The Intergovernmental Fintech Working Group has also announced a public banning on cryptocurrency settling tools. This makes investing & trading less effective, which the Financial Action Task Force plans to dismantle after the pandemic. Policy Papers from the FATF read: “The central bank’s role in ensuring an efficient monetary system could become less effective, as the demand for fiat currency would decrease and crypto assets would effectively compete with fiat currencies.”