BSV
$74.39
Vol 66.68m
-5.31%
BTC
$97525
Vol 105009.63m
-2.47%
BCH
$594.34
Vol 915.03m
-4.54%
LTC
$122.75
Vol 1351.44m
-8.24%
DOGE
$0.43
Vol 9469.15m
-6.35%
Getting your Trinity Audio player ready...

The South African Reserve Bank (SARB) is warming up to the digital assets market and is encouraging financial institutions under its watch to do the same. The Prudential Authority (PA), the arm of the SARB that oversees financial institutions, has called for the institutions to adopt a risk assessment approach to virtual assets service providers (VASPs). 

In a supervisory guidance signed by PA CEO Fundi Tshazibana, the agency stated that it is aware that some financial institutions have opted to terminate all ties with “Crypto Asset Service Providers” or CASPs. It added that the institutions had made the move to de-risk their operations due to uncertainty over the regulatory treatment of digital assets. 

“The PA is aware that certain banks in South Africa have previously opted to terminate the bank/customer relationship with CASPs or discontinued banking services to CASPs… Risk assessment does not necessarily imply that institutions should seek to avoid risk entirely (also referred to as de-risking),” the guidance said. 

The PA warns that this approach could threaten the country’s financial integrity and the application of a risk-based approach. This is because it could frustrate efforts to keep money laundering, terrorism financing, and proliferation financing activities in check. 

In place of the approach, the agency urges banks and other financial institutions to categorize digital assets and CASPs through risk assessment instead to determine the appropriate level of risk management measures necessary to keep relating with them. 

“It is thus prudent for banks to be able to risk categorize CA/CASP related clients through conducting a risk assessment which will assist banks in determining the appropriate level of ML/TF/PF risk management measures necessary, as opposed to total avoidance, in line with the application of a risk-based approach,” the notice added. 

South Africa working towards digital assets regulatory clarity 

The guidance was sent to all banks, branches of foreign institutions, controlling companies, eligible institutions, and auditors of banks or controlling companies. It is, notably, a follow-up of the SARB’s July publication of an assessment of risks within the local banking sector that categorized digital assets among the top 10 risks. 

According to a Reuters report, South Africa now classifies digital assets as financial assets for regulatory and taxation purposes. Several agencies are working on regulations that will be released for the industry within 2022 in line with the classification. 

Some experts are already pointing out that the chosen classification may pose problems for investors. One legal expert says that investors will have difficulty proving how much of their digital assets holdings are eligible for taxations. 

Watch: The BSV Global Blockchain Convention panel, Blockchain in Africa

https://www.youtube.com/watch?v=RzSCrXf1Ywc&t=9562s

Recommended for you

Last Week in AI: Google, OpenAI leads generative AI video creation
This week in the AI space saw Google and OpenAI's race to bring generative AI videos, Intel's CEO resignation, and...
December 9, 2024
Philippines rises 31 spots in UN e-Participation Index
The Philippines has achieved a remarkable milestone in the 2024 United Nations e-Participation Index, securing the 49th spot among 193...
December 9, 2024
Advertisement
Advertisement
Advertisement