Abstract
The regulation of cryptocurrency in South Africa and its impact on the traditional financial system
Cryptocurrency is digital money created by a software program using encryption technology. The South African banking system is regulated by different legislation, and it recognises the South African Reserve Bank as the only institution authorised to issue and destroy banknotes and coins in South Africa. Additionally, South Africa does not recognise crypto assets as legal tender, which means there is no obligation to accept them as a means of payment.
In 2016 the Intergovernmental FinTech Working Group (IFWG) was established to develop regulatory and policy implications for the financial sector and economy among regulators and policymakers of financial technology. Various policies have been drafted by the IFWG and Crypto Assets Regulatory Working Group (CARWG). There have been developments under the Financial Advisory Intermediary Services Act (FAIS Act), Financial Sector Regulations Act (FSR Act), and the Financial Intelligence Act (FICA), however, there are still aspects of cryptocurrency that still remain unregulated in South Africa.
This paper provides insights into the evolving dynamics of the traditional banking system due to the emergence of cryptocurrencies in South Africa and it offers recommendations for stakeholders to leverage its potential for sustainable growth.
Keywords: cryptocurrency; crypto asset; South African Reserve Bank; banking system; Intergovernmental FinTech Working Group; Crypto Assets Regulatory Working Group; cryptocurrency regulation.