In South Africa, the government has just published a consultation document focusing on cryptocurrency regulations. According to the South African Reserve Bank (SARB), there are both risks and benefits related to cryptocurrencies.
In the document, the cryptocurrency is defined with a focus on its digital nature:
"Cryptographic resources are digital representations or tokens accessible, verified, negotiated and exchanged electronically by a community of users.The cryptographic activities are electronically emitted through decentralization entity and have no legal tender, and therefore are not even considered electronic money. IS, therefore, it has no legal compensation agreements. Cryptographic activities have the ability to be used for payments (exchange of this value) and for investment purposes by users of cryptographic resources. Cryptographic resources have the capacity to function as a medium of exchange and / or unit of account and / or deposit of value within a community of users of cryptographic resources ".
The risks of Bitcoin and cryptocurrency
The consultation document outlines the risks of use cases such as the purchase and sale of cryptocurrencies, offering that you place a "threat to the center the exclusive right of banks to issue money and control the money supply " that the bank says "lead to the creation of a parallel – and ultimately fragmented monetary system ". The document indicates Bitcoin as an example of cryptocurrency, stating that the widespread adoption of the decentralized token would lead to a less efficient system due to transaction and data mining times.
SARB says that the cryptocurrency could also lead to a risk of financial stability, emphasizing that "an important psychological level that, once violated, can lead to greater regulatory control and subsequent action by global policymakers and regulators".
The third risk of submitting offers is that the cryptocurrency is directly linked to the widespread adoption of digital tokens. If this happens, SARB claims that the cryptocurrencies "it will essentially be in direct competition with the national payment system, but without the same level of regulatory oversight ".
SARB also stated that there are also risks associated with the use of cryptocurrency, such as the risk of scamming and the lack of protection that users have because of the decentralized and unregulated approach adopted by the 39; blockchain offer.
Advantages of Bitcoin and cryptocurrency
Although there are risks listed in the document, SARB also highlights numerous advantages offered by cryptocurrencies. One of the advantages outlined above is that investors can diversify their portfolios without having to face a country's economic risks. SARB also stated that the anonymity of Bitcoin "It is attractive to some users who wish to not be identified". SARB offered another advantage:
"Holders of cryptographic assets may participate in an alternative market offering (eg specialized products / services in which the supplier only accepts cryptographic assets), that is, accepting cryptographic assets as a medium of exchange".
How the South African bank will regulate cryptocurrencies
Because of the risks, SARB has stated that it will move from the current "level 2" (where cryptocurrencies are recommended) to a "level 4" (where cryptocurrencies are regulated).
SARB said that the regulatory pressure will increase "[Perconseguirel'AML/lalottacontroilfinanziamentodelterrorismo(AML/CFT)sarannonecessarirequisitipiùspecificiinlineaconirecentiemendamentialleraccomandazionidelGruppodiazionefinanziaria(FATF)[Inordertoachieveanti-moneylaundering/combatingthefinancingofterrorism(AML/CFT)requirementsmorespecificrequirementswillbenecessaryinlinewiththerecentamendmentstotheFinancialActionTaskForce(FATF)Recommendations[Perconseguirel'antiriciclaggio/lalottacontroilfinanziamentodelterrorismo(AML/CFT)sarannonecessarirequisitipiùspecificiinlineaconirecentiemendamentialleraccomandazionidelGruppodiazionefinanziaria(GAFI)[inordertoachieveanti-moneylaundering/combatingthefinancingofterrorism(AML/CFT)requirementsmorespecificrequirementswillbenecessaryinlinewiththerecentamendmentstotheFinancialActionTaskForce(FATF)Recommendations"
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