An initial public statement on crypto assets was issued by National Treasury in 2014 as a joint initiative with the Sarb, the Financial Services Board (now the Financial Sector Conduct Authority), the South African Revenue Service and the Financial Intelligence Centre. At the time, the term virtual currencies was used to refer to crypto assets.
Their statement warned members of the public about the risks associated with the use of crypto assets for the purpose of transacting or investing, and advised users to take extreme caution in this regard. The statement further noted that no specific legislation or regulation existed on the use of crypto assets. Therefore, no legal protection or recourse was offered to users of, or investors in, crypto assets.
As a result of the growing interest and rapid innovation in the financial technology (fintech) and crypto assets domain, an Intergovernmental Fintech Working Group (IFWG) was established, comprising members from NT, the SARB, FSCA, SARS and FIC. The aim of the IFWG is to develop a common understanding among regulators and policymakers of fintech developments, as well as policy and regulatory implications for the financial sector and economy. The approach to reviewing fintech innovation is a balanced one, considering both its benefits as well as taking cognisance of associated risks.
Two scenarios
At the start of 2018, a joint working group was formed under the auspices of the IFWG to specifically review the position on crypto assets. This consultation paper is an outcome of this work. The paper provides background and context for the review and provides the scope of the crypto activities assessed. At this stage, two crypto assets use cases (scenarios) have been analysed – buying and selling crypto assets, and making payments with crypto assets.
The paper highlights the benefits and risks of the related activities, reviews the approaches by other jurisdictions, and presents recommendations for dealing with crypto assets from a South African perspective.
Members of the public and any impacted stakeholders are requested to provide comments on the document by 15 February 2019. Input may be submitted by email to SARBFINTECH@resbank.co.za.
