The policy paper would implement strict crypto oversight domestically. It would codify the Financial Action Task Force’s “new technologies” anti-money-laundering and “Travel Rule” recommendations, two international baselines for policing crypto businesses. Those businesses would also need to register with the AML watchdog the Financial Intelligence Centre.
South Africa’s financial regulators recommended cryptocurrency “remain without legal tender status” in a Tuesday roadmap outlining what could become the nation’s first comprehensive crypto laws.
“Crypto assets and the various activities associated with this innovation can no longer remain outside of the regulatory perimeter,” said the IFWG, whose members include the South African Reserve Bank, the Financial Sector Conduct Authority and the National Treasury, among others. “Clear policy stances” must be formed.
Crypto would face new formal restrictions on when and how it can be used. For example, the policy paper calls for a prohibition against using crypto as a settlement tool within South Africa’s financial infrastructure, but asks that crypto be recognized “for domestic payment purposes,” and be regulated accordingly.
“Payments using crypto assets will, in the interim period, be subjected to a regulatory sandbox approach,” the IFWG said.
On the matter of raising capital, the paper says Initial Coin Offering regulations “must be aligned, as far as possible” with South Africa’s traditional securities governance schemes. Even so, payment and utility tokens would also have to submit their white papers to the regulators.
The policy recommendations follow IFWG’s previous crypto
consultation paper, issued in Jan 2019. IFWG’s newest recommendations are open for comment
through May 15.
South Korean Central Bank Accelerates Digital Currency Pilot to Keep Up With Other Nations
The Bank of Korea (BOK) has launched a new pilot program for a central bank digital currency (CBDC) amid concerns other nations could take the lead if it sits on the sidelines.
The South Korean central bank said Monday it had reevaluated the CBDC proposal after observing that other developed nations, including neighboring Japan and its close ally the U.S., were moving forward with their own digital currency plans faster than anticipated.
Abandoning their wait-and-see approach, BOK officials have now pushed the central bank into a 22-month pilot program – which started this month – to assess the technical and legal ramifications of replacing physical cash with a digital equivalent.
“The U.S. and Japan had had no plans to issue a CBDC in the near future, but they changed their stance recently to enhance research in the emerging area,” said an official, speaking to The Korea Times. “The BOK also decided to remain proactive in the rapid shift in payment environments here and abroad, so we are going to set up the CBDC pilot system and check technical and legal issues surrounding its introduction here.”
CBDCs have become an extension of existing international rivalries, with some seeing digital currencies at the center of currency struggle to replace the dollar-denominated global economy. That China, the emerging global powerhouse, has made its digital yuan a top priority has forced lawmakers in other countries to press their own governments to begin work on CBDC initiatives.
Back in February, a group of senior Japanese politicians petitioned
their government – which has already joined a CBDC working group – to share and collaborate on as much digital currency research as possible with close allies, including the U.S., against China’s bid for complete “currency supremacy.”
In the U.S., a digital dollar campaign has garnered support from a group of former regulatory chiefs, a Treasury undersecretary and presidential adviser. The U.S. government itself has kept its cards closer to its chest, but Federal Reserve governor Lael Brainard revealed in February research is underway into whether a digital dollar could counter private initiatives like Facebook’s libra.
The BOK has previously expressed skepticism about CBDCs and even now, in its most recent move, officials say they have no plans to issue a digital currency, perhaps in an effort to curb over-enthusiasm. But one caveat buried deep within Monday’s five-page press release says that position could also change should there be a substantial shift in “domestic and external conditions.”
The findings of the research would be shared with other major central banks, the BOK said.