South African Treasury on Crypto Regulations: Amendments to Relevant Laws to Be Finalized in 2022

The South African Treasury says it expects the amendments to the country’s financial laws — that will see crypto asset service providers being included as accountable institutions — to be finalized in 2022.

Aligning Local Laws With FATF Standards

The South African Treasury has said it expects the proposals to include crypto asset service providers as accountable institutions within the Financial Intelligence Centre (FIC) Act to be finalized this year.

The move to regulate crypto service providers comes as South Africa is attempting to address the “significant weaknesses in the country’s anti‐money‐laundering and counter-financing of terrorism systems” that were identified by the Financial Action Task Force (FATF).

In its latest budget review document, the South African Treasury explains that the proposed amendments, which have been open for public input since June 2022, will see the FIC Act become aligned with the standards set forth by the FATF.

“This change would address concerns around money laundering and terror risk financing through crypto-assets and align the act to the standards set by the FATF for virtual assets and related service providers,” the treasury said in its budget review document.

The Treasury’s latest remarks on crypto assets come several months after the Intergovernmental Fintech Working Group (IFWG) published a position paper that called for the regulation of crypto assets. However, as reported at the time by Bitcoin.com News, the IFWG insisted this call did not mean it was endorsing cryptocurrencies.

Crypto Assets as a Financial Product

Meanwhile, the treasury also revealed in the budget review document that it expects to see crypto assets being declared financial products under the Financial Advisory and Intermediary Services Act (FAIS). This declaration, according to the Treasury, is aimed at protecting consumers. The document explains:

According to this declaration, any person providing advice or intermediary services related to crypto-assets must be recognised as a financial services provider under the act and must comply with the act’s requirements. This will include crypto-asset exchanges and platforms, as well as brokers and advisors. This work is expected to be finalised in 2022.

On top of amending current laws, the review document states work is also underway to have crypto assets regulated under the country’s Exchange Control Regulations of 1961.

Concerning stablecoins, the document said later in the year the IFWG will also publish a follow‐up paper that focuses on risks that are posed by the assets. The document also reveals the South African Treasury is exploring ways “to regulate electricity‐intensive crypto mining” which it claims “is environmentally harmful.”