Here are the highlights

• The South African crypto industry welcomes the introduction of regulations.
• The wrong type of regulation will result in industry players moving elsewhere and for an underground crypto market to grow in South Africa which should be avoided at all costs.
• The proposed South Africa crypto regulations don’t appear to cover the most important aspect of crypto ownership - crypto custody.
• Altify is eager to support regulators from its learnings across the globe in building a best-in-class regulatory framework.

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South Africa is still early in Africa introducing crypto regulations but is far behind the rest of the world. There have been crypto regulations and licences available for over 3 years in other jurisdictions.

The specifics of the crypto regulation are still undefined and there’s a lot of work still needed. Recent industry engagements haven’t shown that the regulators truly understand the crypto asset class and there was not a positive reaction from industry players.

The proposed South Africa crypto regulations don’t appear to cover the most important aspect of crypto ownership - crypto custody. Implementing a way of verifying that crypto companies actually hold the crypto they say they do should be the first focus on regulators given what has happened in recent times.

Altify has been the only crypto provider in South Africa to issue quarterly proof of reserve reports that are verified and signed off by leading audit firm Mazars. These reports provide an independent guarantee that the cryptocurrencies that Altify states they have on behalf of customers are actually securely held. 

Altify is eager to work with the South African regulators to help create regulations that most importantly protect the end consumer while addressing all anti-money laundering and exchange control reporting requirements.

Altify has engaged with German, Swiss, Austrian, British and many more regulatory bodies over the last 3 years.

It’s exceptionally difficult, if not impossible to introduce fair and progressive crypto regulations while you have exchange controls in place.

The right type of regulation will be immensely positive for both the South African crypto consumers and the broader economy. I suspect the crypto industry employs over 8,000 people in South Africa with top-tier salaries and adds over R30 billion to South Africa’s GDP. 

The wrong type of regulation will result in industry players moving elsewhere and for an underground crypto market to grow in South Africa which should be avoided at all costs.

The South African Reserve Bank will supposedly regulate cryptocurrencies as financial assets which is a different approach from every other jurisdiction Altify has evaluated. This will see cryptocurrencies fall under the scope of the Financial Intelligence Centre Act (FICA). This will likely hinder innovation within the crypto payment, stablecoin and NFT space.

The SARB is reportedly looking to treat crypto as a Capital Asset which could mean that everyday people would be using their foreign discretionary allowance of R1m when purchasing crypto from a local crypto platform.

Regulated Crypto Asset Service Providers (CASPs) will be required to implement the Travel Rule to be aligned with the global FATF recommendations which would force CASPs to share crypto owner details with receiving exchanges.

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