After possibly the biggest scam in Bitcoin history, South African government moves to stiffen regulation regarding crypto assets.
South Africa Responds To Bitcoin Scams
Over the past couple of years, the nation has observed a series of crypto scams, including two of the biggest Bitcoin scams ever.
The first of these was in 2020, when the collapse of Mirror Trading International, a crypto trader, resulted in losses of about $1.2 billion in BTC.
And the second was only a few months back. Africrypt, an Africa-based crypto exchange, ran away with $3.6 billion in BTC in a scam which is popularly dubbed as the biggest scam in Bitcoin history.
Following these scams, South African regulators have decided to take action and tighten crypto regulation in the country, as per a Bloomberg report.
The CEO of South Africas banking regulator (called the Prudential Authority), Kuben Naidoo, says “We are trying to put in place the regulatory framework quickly.”
South Africa To Finalize Crypto Regulation Framework Within 3-6 Months
Naidoo is also the deputy governor of South Africas central bank. He says, “Our view is that crypto is a financial product and should be regulated as a financial product.”
Naidoo also says:
Now we are defining this as a financial product and if there are scams where the public is being duped, given incorrect or false information, it is certainly a market conduct issue that should be taken seriously.
First the country plans to implement KYC rules for Bitcoin exchanges. Along with that, the nation will also put in place a digital asset tracking system to prevent money laundering.
Other rules will follow like investor protection guidelines so that scams like Africrypt‘s can’t happen again.
The regulators submitted the proposals earlier in June, but they require public comment before approval. The aim is to finalize a framework within three to six months.
The two brothers at the center of the Africrypt saga have disappeared. According to the latest update, they recently fired their lawyers who were on the missing Bitcoin case.
Naidoo says:
We are of the view that cryptocurrencies are risky and we want to ensure that the financial sector is aware of those risks and pricing for those risks properly.
Bitcoin exchanges in South Africa themselves are eager for these regulations to be in place. Better rules will mean more stability and trust in the industry.