South Africa is set to finally bring order into the cryptocurrency industry in the first quarter of 2020. According to local reports, the South African Reserve Bank (SARB) will implement the measures in order to stop the use of cryptos to evade currency controls.
SARB’s Deputy Governor Kuben Naidoo told journalists that the regulations are the results of a process that began in 2014, a report by local outlet IOL revealed. The regulations will thwart the use of cryptocurrencies to evade currency control measures, he said.
Currency controls dictate how much money a resident of South Africa can send outside the country. These limitations are meant to prevent money laundering. It also prevents the sudden outflow of money from the country which can have devastating effects on the economy. Currently, the limit for undeclared amounts is 1 million rand ($68,000). One can make a special application to the South African Revenue Service, allowing them to send up to 10 million rand ($680,000).
However, many high net-worth individuals have for a long time sought channels that can allow them to send much more than the set limits. Cryptocurrency has emerged as a favorite with this group as there are no limits to how much they can send. The SARB is seeking to put an end to this.
And while the regulations are meant to make crypto better, there are concerns that it could hinder innovation. SA Crypto, the country’s largest blockchain community, was one of the groups that expressed concern. It urged the regulator not to be too conservative with crypto as it could see South Africa miss out on great opportunities.
In statement, the group said, “The implications of the Sarb clamping down on cryptocurrency use for the purpose of stricter capital controls are far-reaching and alarming.”
The group also pointed to the great opportunities in crypto, stating:
“With a market cap of $210 billion (R3.07 trillion) in the cryptocurrency market alone, the industry is driving significant economic growth in countries adopting such progressive regulation, due to the investment many blockchain and crypto asset companies are attracting worldwide.”
South Africa’s crypto market was rocked recently when the country’s second largest bank, FirstRand Bank decided to cut off all ties with crypto companies. The bank cited lack of proper regulations as the reason for the move.
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