Tuesday, December 3, 2019

The central Bank of SA plans to enact restrictions on cryptocurrency

The central Bank of SA plans to enact restrictions on cryptocurrency


The central bank of South Africa is preparing to introduce new rules to halt cryptocurrency from being used to evade currency controls. The governor is the South African Reserve Bank (SARB) Kuben Naido reportedly told the press that the new rules will be put in place in the first quarter of 2020. The central bank would put a restriction on the volume of local currency (rand) that can be sent
outside South Africa.

Presently cryptocurrencies are not governed by any limits making it the most popular method of sending money anywhere in the world, but restrictions from central banks are getting out hand. The new regulations will prevent cryptocurrency from being used to evade currency controls. This has also affected major traditional banks in the country. First National Bank (FNB) said that it will stop serving major local cryptocurrency exchanges in fear of being shut down. It's yet again an ironic turn of events that the cryptocurrency industry has in certain relation come to rely on traditional banking.

Why would the SARB plan to bring in new rules at a time when African has increased cryptocurrency interests? Peer-to-peer bitcoin trading platform, Paxful reported that it has added 800,000 wallets in the past 12 months, driven by the growth in African countries Nigeria, Ghana and Kenya. Twitter's CEO, Jack Dorsey has also acknowledged Africa as a big market for the platform recently saying that the continent will 'define the future (especially the bitcoin one!)'.

The news that the SARB was planning to introduce such rules has sent shockwaves throughout the South African crypto asset and blockchain industry. South Africa’s largest blockchain community, SA Crypto, said in a statement that it had previously written to the SARB urging the regulator to adopt progressive statutes when approaching crypto assets. While some countries like Switzerland have set up regulations to encourage banks and cryptocurrency businesses to play nice, there might be hope for South African businesses yet.

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