South Africa Cracks Down On Crypto, May Track Bitcoin (BTC) Transactions
South Africa May De-anonymize Bitcoin
Per an article from Business Insider’s South Africa-based branch, the Reserve Bank (Sarb) will be releasing a “policy paper” regarding Bitcoin (BTC) and the broader crypto ecosystem in the coming months.
Sarb will purportedly be advising on how crypto wallet providers and related startups, like exchanges, e-commerce platforms, etc., should register with local regulators. The Reserve Bank claims that its up-and-coming registration system should aid in the crusade to protect investors and consumers from the shortcomings of the budding crypto ecosystem.
Reports claim that the financial entity is also looking to integrate such a system to ensure crypto-related laws are paid in full — a purported issue that global governments have been struggling with since Bitcoin’s first trip around the proverbial block.
Sarb seeks to accomplish this seemingly insurmountable task by de-anonymizing BTC transactions, ensuring that exchanges, wallets, and projects of similar caliber actively track transactional data, namely who sent X, who received X, transaction amounts, and other pieces of pertinent data. As put by Business Insider, this system will be much like how “banks are required to know their customers.”
Service providers will also be mandated to comply with anti-money laundering systems, along with reporting and monitoring suspicious transactions, drawing attention to 25,000 Rand+ ($1,800 U.S Dollars) transactions as an example of something deemed questionable.
No comments were on whether assets like Monero or ZCash would be banned.
While their sentiment towards cryptocurrencies seems overly negative, in a consultation paper, made for its role in the Intergovernmental FinTech Working Group (IFGW), the organization did laud this innovation. Sarb purportedly “accepted the reality” of crypto being an important step forward in the financial-technology realm, but remains concerns about certain facets of this ecosystem. More specifically, the Reserve Bank revealed that it is wary about how cryptocurrencies pose a risk to investor protection.
As such, Sarb made it clear that intends to keep an eye on cryptocurrencies — potentially the future of securities/commodities — but is not currently willing to curb trading and innovation fully, as China has controversially done in recent years.
Regulators Looking To Curb Crypto
This recent move comes just days after the European Securities and Markets Authority (ESMA) also commented on this nascent asset class, issuing an advisory report to the E.U. on cryptocurrencies, like Bitcoin, last week. Per Forbes, the E.U. advisory committee recently issued an in-depth report on “crypto-assets.” In the 49-page primer, the ESMA outlined current issues with the underlying crypto market. Although the document was lengthy, a theme became quickly apparent.
The ESMA explained that cryptocurrencies, like Bitcoin, could pose notable threats to investor protection and market integrity. Via the report, the ESMA explained that it currently sees an array of pertinent issues. More specifically, the financial entity called out market volatility, fraud, money laundering, market manipulation, and multi-million dollar cyber-attacks.
ESMA’s analysts and researchers also explained that liquidity in a majority of cryptocurrency markets is shallow, meaning that investors often have “limited possibilities” to cash out of their positions if the worse comes to worst. The detailed report explained:
“These issues are not unique to crypto assets trading platforms they may be exacerbated in the case of crypto-assets because of their high price volatility and often low liquidity.”
The ESMA subsequently advised local governments to abstain from formally legalizing this asset class. Moreover, the body went on to warn traders of crypto to stave away from allocating capital, making it clear that digital assets aren’t sound financial instruments. And as such, the ESMA went on to call for a universal regulatory approach, which could accentuate crypto and related technologies’ benefits, while mitigating underlying flaws.