The Financial Sector Conduct Authority (FSCA), South Africa’s financial sector regulator, is expected to reveal a new cryptocurrency regulatory framework in early 2022.
According to Unathi Kamlana, a commissioner with FSCA, the new framework dictates how investors trade cryptocurrencies such as Bitcoin (BTC). Kamlana hinted in an interview that his company was not keen on authorising high-risk products.
“What we want to do is to intervene when we think that what is provided to potential customers are products that they do not understand and that are potentially highly risky. We must be careful to not only legitimise them.”
The FSCA is reportedly working with other regulatory agencies to establish crypto trading guidelines. It will also look into how the currencies interact with regular financial products and if they threaten financial stability.
Kamlana believes that cryptocurrencies do not yet pose a systemic risk to the stability of the financial services sector. However, the FSCA considers them as assets rather than a currency.
The FSCA is monitoring the plans of the South African Reserve Bank to create its stable coin. Kamlana believes this is the most responsible approach to innovation.
Meanwhile, he urged South Africans to avoid privately created digital currencies. According to him, they are not as stable and dependable as central bank-issued stablecoins. Other countries have taken this same position.
“I think that if I were to advise retail investors, I would say wait to see what comes out of the process of the central bank. The best outcome in terms of stable coins is born out of central bank innovation, given their reliability and stability,” he said.
