After facing likely the biggest scam in Bitcoin history, the South African authorities started to make moves to tense regulations regarding cryptocurrency. Over the last few years, the country has seen a series of crypto scams, including two of the biggest BTC frauds ever.
The first of these scams was in 2020, when Mirror Trading International’s collapse resulted in around $1.2 billion in BTC losses. The second scam was only a few months ago when Africrypt, an Africa-based crypto exchange, got away with $3.6 billion in Bitcoin. This fraud is probably the biggest scam in Bitcoin history. After these scams, South African regulators have decided to stiffen the crypto regulations in the country.
The CEO of South Africa’s banking regulator, Kuben Naidoo, said: “We are trying to put in place the regulatory framework quickly.”
South Africa’s Crypto Regulation to Finalize Within 3 to 6 Months
Naidoo added: “Our view is that crypto is a financial product and should be regulated as a financial product. 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 nation plans to adopt KYC rules for BTC exchanges. Moreover, it will also implement a digital asset tracking system to prevent money laundering attempts. Other regulations will follow, including investor protection guidelines, so scams like the latter one can’t occur again.
The regulators introduced the proposals in June, but they require social commentary before approval – the goal is to finalize a structure within three to six months.
“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,” the banking regulator said. Naidoo is also a deputy governor of South Africa’s central bank.