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The South African Reserve Bank and other regulators appear to be tightening their controls over crypto transactions in the country. The regulators reportedly issued a warning to crypto users that transferring cryptocurrencies, such as Bitcoin (BTC) or Ether (ETH) bought, from a local exchange in the country to an overseas crypto platform would be deemed a criminal offense.
The new interpretation of South Africa’s exchange control regulations appeared in a FAQ document recently published by the Intergovernmental Fintech Working Group (IFWG), according to Mybroadband. The IFWG is a body composed of various financial regulators including the South African Reserve Bank, National Treasury, the South African Revenue Service, Financial Sectors, Conduct Authority, Competition Commission, Financial Intelligence Centre, and National Credit Regulator.
“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,” the IFWG said in the released FAQ document. The FAQ added that the prohibition includes transactions where a person purchases crypto in South Africa and uses them to externalize “any right to capital.”
The IFWG also warned that breaking these regulations is a criminal offense. Violators could face a penalty of R250,000 (around $17,500) and up to five years imprisonment.
South African crypto platforms are still studying the IFWB’s position paper. For instance, Richard de Sousa, the CEO of Altcoin Trader, said his firm is still “considering many things” and is yet undecided about its next move.
Meanwhile, Marius Reitz, Luno’s GM for Africa, expressed his company’s willingness to work with the country’s central bank in terms of crypto regulations. “Luno has engaged extensively with the Reserve Bank on the practical challenges posed by applying the existing exchange control regulations to crypto-assets and looks forward to continuing to work together to ensure regulations are fit for purpose,” Reitz said.
While expressing his support for regulations, he also opined that a phased approach would probably be best. “Luno is supportive of clear and market-conducive regulations for the crypto industry,” Reitz added. “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.”
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