The latest report from South Africa indicates that the transfer of locally acquired cryptocurrency to overseas cryptocurrency exchanges will now be subject to the country’s foreign exchange control regulations. Therefore, an individual’s purchase of encrypted assets in South Africa and using them to externalize “any capital rights” transactions will be considered a criminal offence.

Imprisonment risk

According to a report by Mybroadband, this new interpretation of the country’s foreign exchange control regulations is contained in a recently issued FAQ document by the Intergovernmental Fintech Working Group (IFWG), which is composed of South African financial regulators. In the document, the regulator explained:

Exchange Control Regulation 10(1)(c) prohibits the export of capital or capital rights directly or indirectly from South Africa without the permission of the State Treasury.

The IFWG document added that individuals who violate these regulations will face fines of more than US$17,500 (250,000 rand) and may face up to five years in prison.

South African Exchange is still studying the IFWG position paper

At the same time, the same report indicated that the South African cryptocurrency exchange is still studying the IFWG’s position paper, while others have stated that they want to help regulators establish an appropriate regulatory framework.

For example, Mybroadband quoted Altcoin Trader CEO Richard de Sousa as saying that his company is reviewing papers published by IFWG and “is considering many things.”

On the other hand, Marius Reitz, Luno’s general manager for Africa, told the same publication that although his company “supports the development of clear and market-friendly regulations for the crypto industry”, it is not yet clear “how this is [new regulation] Will be implemented and regulated. “

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The boss of Luno Africa also shared what he believes is the advantages of implementing regulations in stages rather than implementing cumbersome regulations prematurely. He explained:

The phased approach to regulation of the South African crypto industry—starting with mandatory AML/KYC obligations—is a smart approach that helps mitigate any potential negative effects of regulation.

New measures against encryption

As recently reported by News, South Africa’s IFWG has published a position paper on crypto assets, calling for regulation. After the position paper was released, reports soon appeared about financial institutions preventing customers from using credit cards to purchase cryptocurrencies.

Attempts to prevent local exchanges from transferring cryptocurrencies to overseas platforms appear to be the latest sign that South African regulators now want to control privately issued digital currencies.

However, by threatening to punish individuals and entities that transfer locally acquired crypto assets to overseas exchanges, South African regulators are trying to review cryptocurrency transactions. Whether these restrictions will inhibit the use of cryptocurrencies, or whether they will force traders to go underground, as Reitz warned, remains to be seen.

Believe that South African regulators have the ability to prevent the transfer of crypto assets to overseas platforms? Tell us what you think in the comments section below.

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