Imminent Crypto Regulation in South Africa, According to Local Exchanges

While South Africa-based crypto exchanges expect digital currencies to continue to gain value in 2022, they also believe that more regulation should be introduced to the sector this year.

Exchanges indicate that crypto asset price volatility will persist this year, while decentralized finance trends will gain momentum.

At the end of 2021, some of the country’s major exchanges told ITWeb that they see cryptocurrencies continuing to gain momentum in 2022, although they have called for industry regulation to keep digital assets are generalizing.

According to Luno, crypto regulation is imminent in South Africa. The local crypto exchange notes that in addition, continued price volatility and more formal ties to the financial services industry are planned for 2022.

“Globally, we have seen moves to regulate crypto and we anticipate the introduction of a clear South African regulatory regime likely by the end of 2022. The regulatory certainty will have a host of positive spin-offs for the crypto industry. crypto,” says Marius Reitz, Luno GM for Africa.

The company claims that in the United States, where regulations allow entry into crypto, companies like Fidelity, Goldman Sachs, and JP Morgan are entering the crypto market, and the Proshare Bitcoin ETF (the first Bitcoin ETF in world) saw record inflows into the fund.

In anticipation of local regulations, Luno notes that several asset managers are working behind the scenes to design crypto products and solutions.

According to the crypto exchange, previous attempts to list a Bitcoin ETF on the local exchange were unsuccessful, but the listing of crypto instruments on the JSE will be a watershed moment that will allow asset managers to to get into crypto.

Marius Reitz, Luno's General Manager for Africa.

Marius Reitz, Luno’s General Manager for Africa.

“The regulations will also increase the number of formal partnerships between banks and crypto companies, which will facilitate greater crypto adoption.

“Once the regulations are finalized, financial advisors will be able to offer crypto products and services to clients. Luno partners with such companies to ensure clients can make crypto investments through their trusted financial advisors,” says Luno.

For Jonathan Ovadia, CEO of Ovex, 2022 will be the year of crypto-asset regulation. “It seems that the FSCA [Financial Sector Conduct Authority] will come out with a settlement this year.

“We are extremely excited about this as it will bring a lot of legitimacy to the sector, reduce uncertainty for our partners and open the market to institutional investors.”

Similarly, Brett Hope Robertson, chief investment analyst at Revix, believes that 2022 will be a defining year for crypto regulation.

According to Hope Robertson, the South African Reserve Bank is working with the Intergovernmental Task Force on FinTech and the Task Force on Crypto Asset Regulation on how best to deal with crypto assets within the framework of regulation and rules of South African exchange controls more detailed.

Jonathan Ovadia, CEO of Ovex.

Jonathan Ovadia, CEO of Ovex.

“Although there are many rumors about what this regulatory framework could be, we hope to obtain clarification on this by the end of the first quarter of 2022,” he said.

ChainEX CEO Michael Bernardt comments that SA’s financial regulator plans to unveil a regulatory framework early this year.

“We believe that more legislative requirements will be put in place for crypto-asset service providers (CASPs) to bring us closer to current financial industry rules and regulations,” says Bernardt.

He adds that although PSAPs have not yet been included as a responsible institution under Schedule 1 of the Financial Intelligence Center Act 38 of 2001, many PSAPs comply with legislative requirements to combat against money laundering and terrorist financing, as set out by the Financial Intelligence Center (FIC).

This includes registering with the FIC, identifying users, conducting user due diligence, maintaining records of customer and transaction information, continuously monitoring suspicious and unusual activity, and meeting its reporting obligations. at the FIC, explains Bernardt.

Brett Hope Robertson, Senior Investment Analyst at Revix.

Brett Hope Robertson, Senior Investment Analyst at Revix.

Richard de Sousa, CEO of AltCoinTrader, says, “I think it’s fair to say that regulators will be walking a fine line. On the one hand, they don’t want to stifle innovation, but on the other hand, they have to maintain economic law and order.

“From regulators, we can expect to see a slow and steady progression, with them playing a big watchdog role – watching what is happening in other countries.”

However, De Sousa doesn’t expect to see drastic changes in the regulations.

“The South African government, the Reserve Bank and the Financial Intelligence Center communicate with the international community. They set up a slow and steady regulation, at the same level as the rest of the world. We expect to see this settlement come slowly.

“Institutional investors are looking at the regulations and once they get some clarity, they will start contributing a lot more to the crypto industry.”

Michael Bernardt, CEO of ChainEX.

Michael Bernardt, CEO of ChainEX.

De Sousa believes the cryptocurrency will continue to rise in value this year. “I think that’s a trend we can expect to see over the next two years. Cryptocurrency has become mainstream – we’ve seen institutions pay more attention to it – and with the current economic climate, we can expect crypto to be a safe haven for the inflation and economic turmoil we are experiencing.

Says Hope Robertson: “Crypto market capitalization is up more than +105% year over year since 2014. We expect this trend to continue.

“Many investment heavyweights believe that crypto as an asset class will have over 1 billion users by the end of 2022. For perspective, we are currently sitting at around 300 million users.”

Bernardt notes that alternative cryptocurrencies follow Bitcoin. “Bitcoin’s price action is still printing a bullish pattern. I think we still have a lot of upside in the market if Bitcoin maintains this current level and we don’t see price levels below $30,000.

Richard de Sousa, CEO of AltCoinTrader.

Richard de Sousa, CEO of AltCoinTrader.

Ovadia agrees, saying over $100 billion was raised last year to invest in the cryptocurrency ecosystem.

“This money is on the sidelines and waiting to come in. There will always be volatility; a 50% pullback from here is not impossible. But we see a lot of new people entering the ecosystems, new projects and real use cases happening daily,” he notes.

In 2021, the crypto market saw new all-time highs and also suffered some brutal blows. Cryptocurrencies are still a new alternative asset class and continued volatility is expected, says Luno.

He points out that a longer-term view shows that the crypto maintains its upward trajectory even with occasional massive price drops.

“Last year, Luno reached the milestone of nine million wallets (customers) in more than 40 countries. As the sector grows in popularity, it attracts world-class talent, as well as major media attention. who devote more resources to quality reporting,” he concludes.