Although the crypto craze is everywhere, concerns about standards and transparency in dealings exist. Stakeholders and other players believe that the standards are too low and that something needs to be done as soon as possible. In the U.S., consumer groups believe it is time for the Fed to regulate crypto assets via the product regulatory regime. In Australia, consumer groups want the government to institute solid financial regulations in the crypto market to protect the public. They argue that the crypto market is not just volatile but complex and carry products that can harm Australians.
The same sentiments have cropped up in South Africa hence the new legislation that will come into effect on 19th December. The laws are intended to protect anyone looking for the Best Crypto in South Africa.
To enforce global tax transparency, the G20 team held a meeting in April 2021 and mandated that the OECD develop a framework for the exchange of tax-related information. In august 2022, CARF (Crypto Asset Reporting Framework) was established to fast-track the exchange of crypto asset-related information.
CARF will do this by incorporating the already established antimony laundering standards where the identification of customers transacting or investing in crypto assets is made. Further, some amendments require reporting the role of the controlling person.
Notice that the popularity of crypto has been growing especially in South Africa, and institutional investors are now turning to digital assets as a source of income to help them hedge against inflation and unpredictable economic trends. For instance, interest in cryptocurrency investment spiked during the Covid-19 pandemic making the asset a good investment alternative to gold. Thus, improved standards and transparency may be the key to crypto becoming a mainstream financial asset. Moreover, transparency will enhance the process of conducting financial transactions.
What are the gains of improved standards and transparency?
Of course, improving and enhancing standards and transparency will come with many benefits. But the main ones include protecting users, enabling the government to generate revenue through taxes collection, and unlocking business opportunities.
Note that what most of us already know about crypto is just a drop in the ocean. Thus, the crypto world is likely to unlock many opportunities in the coming days. Therefore improving standards and transparency is likely to turn crypto assets into the next gold mines.
Elsewhere, banks are ramping up infrastructure to increase exposure to crypto assets. If the recent incursion of mainstream banks into the crypto market is anything to go by, then the multi-billion crypto market is yet to unleash its full potential.
Indeed, blockchain technologies continue to play a vital role in the world’s major economies. As such, a proper guideline framework will grow the technology and benefit the sector more. For instance, there are attempts to digitize fiat money, putting traditional banks under pressure to familiarise themselves, utilize blockchain technologies, and move their assets onto a new platform.
It is for this reason that South Africa Lawmakers have unveiled rules to enhance industry oversight. The Financial Sector Conduct Authority has indicated that all crypto assets will be treated as financial products. So any company that deals with or plans to trade in the assets must obtain relevant licenses.
The laws are vital and are intended to protect the public against the ever-increasing risks in the digital world. This is something the authority could not do since crypto assets have for many years operated outside their parameters.
South Africa is pushing to regulate cryptocurrencies to protect users from fraudsters and the turbulence associated with crypto. As a country, South Africa has experienced two serious scams that led to the disappearance of billions of dollars worth of crypto investments. Thus, there is a need for deeper scrutiny to stop the providers who would wish to operate unseated.
Final Thoughts
The new rules that continue to be implemented will allow clients to place complaints regarding exchanges that will not comply with the existing laws. It will give the regulator a chance to act on all complaints while providing the framework for future taxation of crypto dealings. Also, it will allow traditional banks to provide banking services to crypto platforms since the laws will lower the risks that come with crypto assets.
Author’s name and bio
Emma Smith
Emma Smith received her MFA in Creative Writing from Mills College. Born in Oakland, California, Emma is notorious among her friends for always being surprised by twist endings to books/movies. When not writing, Emma enjoys exploring the outdoors with her dog.