As South Africa receives more than its due share of cryptocurrency-related scams, a report indicates that regulators are responding to this challenge by fast-tracking the process of creating a new regulatory framework. Therefore, the regulator now expects that this “prior to the announcement of the proposal in early June” process will be completed in “three to six months.”
Acknowledge the risks associated with encryption
According to a report, in accordance with the requirements of the upcoming regulatory system, participants in the South African financial sector are expected to be aware of the risks associated with cryptocurrencies. They should also price these risks correctly.
At the same time, the report also quoted Kuben Naidoo, CEO of the banking regulator Prudential Authority, explaining how the drafting process is expected to unfold. The CEO said:
We are working hard to quickly establish a regulatory framework. It is important to define it as a financial product and then to develop a regulatory framework.
Fight fraud through regulation
At the same time, South African regulators are becoming more and more urgency about this issue as the country is struggling to deal with the Africrypt crash, the latest high-profile cryptocurrency investment platform crash.
As previously reported by Bitcoin.com News, Africrypt went bankrupt shortly after its directors Raees and Ameer Cajee fled with the BTC of investors initially believed to be worth billions of dollars. Since then, investors have been trying to find and retrieve the lost BTC with the assistance of a South African law firm.
Less than six months ago, before the collapse of Mirror Trading International (MTI), Afriypt had a shocking collapse. Just like Africrypt, MTI went bankrupt after its CEO Johann Steynberg disappeared with investor funds. Since then, MTI investors have also tried to recover their funds.
Naidoo, who is also the Deputy Governor of the South African Reserve Bank (SARB), revealed some initial steps the regulator plans to take to avoid recurring MTI and Africrypt-type Bitcoin investment scams. According to the report, one of the steps will include establishing “know your customer” rules for cryptocurrency exchanges. In addition, the exchange is expected to “create an asset class monitoring system to prevent funds from being washed out abroad.”
Naidoo said that after that, investor protection guidelines and banking capital risk management rules should come into effect.
Do you think the establishment of a regulatory framework will successfully end the proliferation of Bitcoin scams in South Africa? Tell us what you think in the comments section below.
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