The South African Reserve Bank (SARB) has published a consultation paper on working toward policy proposals for crypto assets in the country.

Assessing South Africa’s own crypto landscape, the paper noted positively that customers purchasing crypto assets could benefit from diversifying investments independently of specific country risk. But at the same time, it acknowledged the challenges of crypto assets not fitting “neatly within the current regulatory framework”, as well as vulnerability to hacks and scams.  

In particular, crypto assets present too many opportunities for “regulatory arbitrage”, an area that the paper says should be minimized. The paper also recommends that crypto assets remain without legal tender status and not recognized as electronic money either. It urges an appropriate regulatory framework to be developed, beginning with the registration of crypto asset service providers and their compliance with anti-money laundering conditions.

It concluded that “regulatory action should not be delayed… but to rather act and amend as innovation evolves”.

Bitcoinist has taken the paper to suggest owning cryptocurrency in South Africa could become more difficult in the near future.

The consultation paper is by South Africa’s Crypto Assets Regulatory Working Group, which comprises SARB together with fellow regulators and policymakers the Financial Intelligence Centre, Financial Sector Conduct Authority, National Treasury, and South African Revenue Service.

The paper is open to public comment till February, after which a crypto assets policy paper will be crafted to set out how such assets are to be managed within South Africa, said SARB in a statement.