South African Reserve Bank (Sarb) is planning on presenting new rules to curb illegal use of cryptocurrencies in activities such as money laundering.
The cryptocurrency news came after Kuben Naidoo, Deputy Governor of Sarb, mentioned the plans while talking to reporters. The new rules, which have been under consideration for five years, are expected to be implemented by the first quarter of the coming year (2020).
Currently, South Africans are limited to sending 11 million rand ($750,570) across borders. One million rand can be sent without any declaration and 10 million rand can be sent only with a special South African Revenue Service application. This makes cryptocurrency the most favored method of transferring money across borders.
However, the use of cryptocurrency takes a hit because of the decision by the Sarb to restrict the use of cryptocurrency. According to the South African blockchain community SA Crypto, this action can have a “far-reaching and alarming” consequences. It also added that “Conservative regulations would not only hinder innovation in South Africa, but repel investment into the country.”
Sarb’s Spokesperson has not yet commented on the news.
Other South African Banks Already Tightened Crypto Laws
Following a worldwide trend, other local banks such as First National Bank (FNB) have started tightening their laws for digital currencies. FNB has already discontinued all dealings with businesses which use cryptocurrency. It has also shut down all bank accounts owned by such crypto-oriented entities.
In a statement released, FNB (also known as FirstRand Bank) stated the reason behind discounting its association with cryptocurrency businesses is the “potential risks” that crypto can bring, especially without any proper framework.
FNB also announced that it will stop dealing with some of the major cryptocurrency exchanges such as: Luno, ICE3X and VALR. ICE3X called this decision “conservative” and hoped that this would force the South African government to come up with more clear guidelines when it comes to cryptocurrency.
Recently there has been a surge in cryptocurrency usage and interest by the public in South Africa. Just over the past year, 800,000 wallets were added to a Bitcoin trading platform “Paxful” because of this sudden increase in interest by South Africans. Africa is considered a huge market for cryptocurrency as users have very restricted traditional financing options.
Twitter’s CEO, Jack Dorsey, also showed interest in the region, saying how the continent will “define the future” of Bitcoin(BTC)trade. Currently, there 64 blockchain and cryptocurrency firms in 11 sub-categories. These include crypto exchanges and wallets.