Fintech progression in Sub-Saharan Africa as South Africa advances to regulate crypto by end of 2022

Fintech progression in Sub-Saharan Africa

In 2019, South Africa took a different approach to address cryptocurrency transactions, prompting increased use of digital payments to settle crypto transactions. After encountering several challenges, the South African government established a crypto assets regulatory working group to investigate crypto and blockchain concepts. Firstly, there was an increase in fraud cases where ransom was demanded in cryptocurrency. Secondly, SARS had difficulty tracking capital profits and losses declared on Cryptocurrencies. The crypto assets regulatory working group has representatives from; Financial Sector Conduct Authority, The Financial Intelligence Centre, Treasury, 

The South Africa Revenue Service (SARS) and the Reserve Bank. The task force was tasked with developing a unified intergovernmental regulatory framework and a cohesive governmental response to crypto and technologies surrounding the economy. This fundamental approach has finally paid off, with experts from South Africa’s largest crypto exchange, Luno reporting that crypto will be regulated by the end of 2022. It is important to note that South Africa has one of the most sophisticated financial systems in Africa. What does this mean for South Africans interested in cryptocurrency and the African Continent? 

By the end of January 2021, daily crypto asset trading values in South Africa were “exceeding $145 million.” With the new regulations finalised, South Africans should expect new products and services that are tailor-made to their needs from financial advisors and developers working around the clock. Secondly, new partnerships by banks and cryptocurrency companies aimed at the adoption of crypto by the masses. Thirdly, the launch of South African CBDCs (Central Bank Digital Currencies) closely follows in the footsteps of Nigeria in the recently launched e-Naira. 

Fifthly, the development of payment and peer-to-peer platforms will incorporate familiar tools like cards and mobile money in the crypto ecosystem, making buying and selling crypto easy, seamless, fast and safe. Six, listing crypto instruments in the JSE (Johannesburg Stock Exchange) regulations will promote transparency in the transactions, therefore, minimising abuse and fraudulent activities. 

Next, the regulations are also expected to safeguard banks and financial institutions against Cryptocurrencies assets creating financial stability risks. And lastly, open banking, where financial institutions come up with well elaborate customer identification and verification systems to be able to monitor any suspicious and unusual activity by their customers and also be able to share information about their customers in a bid to protect them. For Africa, this is an exciting move since this will give confidence to other countries such as Kenya and Ghana, which rank third as top markets for trade and investment in crypto.

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