Following the recent introduction of German crypto regulations, it is reported that South Africa could be the next county to changes its laws. However, the South African crypto laws look like being a lot tougher than the German equivalent.
What Are the New South African Crypto Laws?
The South African Reserve Bank (SARB) is the governing body that is said to be considering this new legislation. This is the country’s central bank. According to the Business Report site, they will be bringing in new laws for the first quarter of 2020.
The reason for this is to stop South African residents from using cryptocurrencies to get around currency controls. It isn’t yet clear exactly what form these laws will take. Yet, it is feared that they will make it a lot more difficult for South Africans to use Bitcoin, Ethereum and other coins.
SARB’s deputy governor is Kuben Naidoo. He spoke to journalists and pointed out that the consultations on this matter have been going on since 2014. It is reported that in the last week, a number of South African banks have already begun to close accounts for cryptocurrency-related companies.
One bank carrying out this clampdown is the FirstRand Bank (FNB). They said in a statement that this is a “prudent course of action” since that there are no appropriate regulatory frameworks in place yet.
Why Is Currency Control an Issue?
South Africa has limits in place about how much money can be sent outside the country. This applies both to individual citizens and to companies.
At the time of writing, the upper limit is R1 million, which is about $68,600 or £53,000. This figure can be sent without being declared. Anyone who wants to send up to R10m for foreign investment reasons can apply for the limit to be raised.
However, the authorities fear that people may use digital money to move money abroad. The volatility of the rand is said to be another of the reasons why digital money has been well-received here.
What Has the Reaction Been?
Naturally, the news have been greeted with dismay in the South African crypto community. Exchanges and other blockchain companies in the country had been hoping for more relaxed legislation to allow cryptocurrency use.
Given that over 10% of South African residents are said to own cryptocurrencies, this new law would be a blow to many people.
We still await the official confirmation of the new South African crypto laws. Yet, it does seem that this country is possibly set to become the latest nation put an end of legal cryptocurrency use.