Fresh reports from South Africa suggest that the transfer of locally acquired cryptocurrencies to overseas crypto exchanges will now be subject to the country’s exchange control regulations. Consequently, transactions where an individual purchases crypto assets in South Africa and uses them to externalize “any right to capital” will be deemed a criminal offense.
Risk of Imprisonment
According to a Mybroadband report, this new interpretation of the country’s exchange control regulations is contained in the FAQ document recently published by the Intergovernmental Fintech Working Group (IFWG), a body that is comprised of South Africa’s financial regulators. In the document, regulators explained:
Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is, without permission from the National Treasury, directly or indirectly exported from South Africa.
The IFWG document adds that individuals in contravention of these regulations face a financial penalty of over $17,500 (250,000 rand) and possibly up to five years in prison.
South African Exchanges Still Studying IFWG Position Paper
Meanwhile, the same report suggested that South African crypto exchanges are still studying the IFWG’s position paper, while others say they want to help regulators put in place the appropriate regulatory frameworks.
For instance, Richard de Sousa, the CEO of Altcoin Trader, is quoted by Mybroadband stating that his firm is looking at the papers published by the IFWG and is “considering many things.”
On the other hand, Marius Reitz, Luno’s GM for Africa, told the same publication that while his company “is supportive of clear and market-conducive regulations for the crypto industry” it is presently not clear “how this [new regulation] will be implemented and regulated.”
The Luno Africa boss also shared what he sees as the advantages of a phased implementation of regulations over the early imposition of burdensome regulations. He explained:
A phased approach to implementing regulation for the crypto industry in South Africa — beginning with mandatory AML/KYC obligations — is a sensible approach which will assist in mitigating any potential negative implications of regulation.
New Push Against Cryptos
As recently reported by Bitcoin.com News, South Africa’s IFWG released a position paper on crypto assets that calls for their regulation. Following the position paper release, reports of financial institutions blocking clients from buying cryptocurrencies with credit cards soon emerged.
The attempt to stop local exchanges from transferring cryptocurrencies to overseas platforms appears to be the latest sign that South African regulators now want to rein in 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 attempting to censor cryptocurrency transactions. It now remains to be seen if these restrictions are going to stifle crypto use or if this is going to force traders to go underground as Reitz warned.
Do believe that South African regulators are capable of stopping the transfer of crypto assets to overseas platforms? Tell us what you think