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The idea of the South African Reserve Bank regulating and legalizing the crypto industry has been positively received by SA's local cryptocurrency exchanges. The idea of regulation is mostly supported, as it is thought that this regulation will bring security to the crypto industry in the country and will also weed out malicious people in the industry. In previous years, the central bank had refused to place cryptocurrencies in a legal asset class and even made efforts to restrict their use.

In July 2022, the central bank announced that it was reconsidering its stance toward cryptocurrencies and was working on a set of regulatory frameworks to govern cryptocurrency transactions in the country. The statement by Kuben Naidoo, member of the Monetary Policy Committee and deputy governor of SARB, shows that SARB's views on cryptocurrencies have changed a lot. Cryptocurrency is now seen as an asset class and needs to be regulated accordingly.

SARB's primary concerns are anti-money laundering legislation; preventing the use of cryptocurrencies in financing terrorism; complying with foreign exchange and tax controls, and protecting investors.
 

Exchanges' Attitudes Towards Regulation

The regulation concerns cryptocurrency exchanges as much as personal investors. South African cryptocurrency exchanges believe that with regulation, crypto scams will be greatly reduced.
 

Luno

Luno is the company that most positively welcomes the regulation of cryptocurrencies as a financial asset. Luno thinks that the regulation is a good step for the crypto industry and that it will now be easier for the public to identify licensed and reliable platforms. Marius Reitz, Managing Director of Luno for Africa, says that with regulation, all crypto service providers will need to acquire a Financial Service Provider license. Similar regulation would also help binary options brokers in South Africa, that are yet waiting for their regulation by the FSCA.

Clear laws around the world and in South Africa will increase confidence and price stability in the cryptocurrency industry. Markets with more stable prices are more widely adopted. Investors will be protected from crypto platforms that do not comply with regulations. Luno is already voluntarily registered with the Financial Intelligence Center, so once the regulation comes, the platform won't have to make too many changes. Because this platform operates globally in Singapore and Malaysia, which are already regulated markets.

The Luno platform, the founder of the Crypto Assets Regulatory Working Group, is working with SARB during lawmaking.
 

Ovex

Ovex is among those who think that regulation will be very good for the crypto industry. The CEO of the company, Jonathan Ovadia, attributes so many malicious people in the crypto industry to the decentralized and permissionless nature of the blockchain. As a result of regulation, the people in the industry will be protected, malicious people will be weeded out, and, as a result, the cryptocurrency industry will have a better image. Ovex states that it looks forward to the regulation.
 

VALR

VALR seeks consumer protection to serve the cryptocurrency industry to the highest standard. The VALR crypto platform has always been an advocate of appropriate regulatory frameworks. Farzam Ehsani, CEO of the platform, says VALR is already a regulated institution. "All users of the platform go through KYC controls. There is an experienced team that implements the compliance and risk management program on the platform." We also have procedures and policies for counter-terrorism financing and money laundering and work with authorities to combat illegal movements of funds. "

According to Farzam Ehsani, VALR has been ready for the regulatory framework for years and will progress much faster once the cryptocurrency market is regulated all over the world. The regulatory framework established with all stakeholders does not disrupt the sector. A regulation that protects the interests of society and encourages progress and innovation is welcomed by everyone. An otherwise poorly regulated framework also has negative effects on the country, industry, and individuals alike. VALR is ready to assist the authorities in every way possible to contribute to South Africa's employment and attract foreign direct investment.
 

ChainEX

ChainEX considers it necessary to regulate the crypto market in SA. Thinking that many crypto projects for real-life solutions in the country can be developed thanks to regulation, Henco Vorstman said, "South Africa has been grappling with scams for years and market regulation will make the country safe for all investors." Vorstman did not hesitate to say that the government has reservations about 'over-regulating' the market.
 

Conclusion

Although there is no clear regulation in SA, cryptocurrencies are very popular. According to a survey by KuCoin in July, 22% of adults in South Africa trade or own cryptocurrencies. There is also a large segment of the country that sees DeFi as the future of traditional finance. These rates could continue to rise rapidly as cryptocurrency platforms become safe for local crypto users and traders. Each of the CASPs will have to obtain an FSP license, and licensed platforms will be able to stand out and increase their profitability. The state, which collects taxes from profits, will also increase its revenue, thus a positive step for all four sides: industry, investors, companies, and government.

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