Recent reports from South Africa suggest that the transfer of locally acquired crypto to foreign cryptocurrencies is now subject to the country’s foreign exchange control regulations. As a result, transactions in which a person purchases crypto assets in South Africa and uses them for transfer to offshore exchanges will face jail sentences.
Those who transfer cryptocurrencies bought in South Africa to foreign exchanges face jail
As Mybroadband reports, this new interpretation of South African foreign exchange control regulations is contained in an FAQ document recently published by the Intergovernmental Fintech Working Group (IFWG), a body of South African financial regulators. In the document, the supervisory authorities state:
Securities Market Controls Ordinance 10 (1) (c) prohibits transactions in which capital or the right to use capital is exported directly or indirectly from South Africa without the approval of the National Treasury.
The IFWG document adds that violating these regulations could face fines in excess of $ 17,500 (rand 250,000) and potentially up to five years in prison.
The South African stock exchanges are still working on a document on the position of the IFWG
Meanwhile, the same report suggests that South Africa crypto exchanges are still investigating the IFWG’s position, while others say they want to help regulators create a framework for the IFWG’s relevant regulations.
Richard de Sousa, CEO of Altcoin Trader, for example, was quoted by Mybroadband as saying that his company was reviewing the documents published by the IFWG and “looking at a lot of things”.
On the other hand, Marius Reitz, Managing Director of Luno Africa, said in the same publication that while his company supports “clear and market-friendly regulations for the crypto industry …”, it is currently unclear what this new regulation will look like.
The head of Africa Luno also shared the benefits of implementing regulations gradually versus introducing heavy regulations early on. He explained:
Taking a step-by-step approach to regulating the crypto industry in South Africa – starting with mandatory AML / KYC obligations – is a sensible approach that will help mitigate any potential negative effects.
People who transfer South African cryptocurrencies to foreign exchange face jail sentences – South Africa wants to control cryptocurrencies
As Bitcoin.com News recently reported, the South African IFWG has published its statement on cryptocurrencies and called for its regulation to be implemented. After taking a stand on paper, reports soon surfaced from financial institutions preventing customers from buying cryptocurrencies with credit cards.
Efforts to prevent local exchanges from transferring cryptocurrencies to offshore platforms seem to be the latest sign that South African regulators are now looking to control privately issued digital currencies.
However, regulators in South Africa are attempting to censor cryptocurrency transactions by threatening to punish individuals and legal entities who transfer domestically acquired crypto assets to foreign exchanges. It remains to be seen whether these restrictions will deter the use of the cryptocurrency or whether they will force traders to go underground, as Reitz has warned.
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