New framework for regulating Bitcoin and other cryptocurrencies in South Africa

The Crypto Assets Regulatory Working Group (CARWG) has published a new position paper on the regulation of Bitcoin and other crypto-assets in South Africa.

The working group – which is comprised of teams from Treasury, the Reserve Bank, SARS, and the Financial Intelligence Centre – aims to formulate a national policy stance on crypto-assets.

It aims to do so while ensuring the continued integrity and efficient functioning of financial markets, maintaining financial stability, protecting the rights and interests of customers and investors, and combating illegitimate cross-border financial flows.

Some of the biggest risks around cryptocurrencies that the group has identified include:

  • The risk of a parallel, fragmented, non-sovereign monetary system;
  • Consumer protection as well as market efficiency and integrity risks;
  • The risk of an undefined legal and regulatory framework;
  • Money laundering and terrorism financing;
  • Exchange control risks;
  • Cyber security risks; and
  • Dodgy initial coin offerings (ICOs).

To address these issues, the working group has recommended that entities providing crypto-asset services be regulated as ‘crypto-asset service providers’  or ‘CASPs’.

The table below outlines how these CASPs would be defined:

These CASPs would be regulated under section 1 of the Financial Intelligence Centre Act and would be considered ‘accountable institutions’ – similar to banks and other financial institutions.

As part of this process, all CASPs will be required to register with the Financial Intelligence Centre (FIC) as an accountable institution.

They will also have to abide by all of the FIC’s legislative requirements including:

  • Conducting customer identification and verification;
  • Conducting customer due diligence;
  • Keeping records;
  • Monitoring for suspicious and unusual activity on an ongoing basis;
  • Reporting to the FIC any suspicious and unusual transactions;
  • Reporting cash transactions of R25 000.00 and above (or the applicable threshold…


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