[2018-04-06] Crypto Self-Regulation Deemed Likely in South Africa

[nickbelski]

A “self-regulatory approach” has been mentioned as a likely solution for the South African crypto sector. A non-government body could adopt rules and implement industry standards. The central bank in Pretoria is expected to formulate the policy framework.

Premature Regulation Throttles Growth

The South African Reserve Bank (SARB) has set up a team to monitor fintech developments and assist its efforts to finalize the regulatory regime for cryptocurrencies. Representatives of the private sector have proposed the creation of a Self-regulatory Organization (SRO). While banking falls within the central bank’s jurisdiction, cryptos are not suited to traditional centralized supervision, said a legal expert familiar with the matter.

“Regulation through self-regulatory organizations may be a more likely solution,” Bridget King, Finance and Banking Practice Director at a leading South African law firm, told the Business Report. The SRO can be registered as a non-governmental body authorized to adopt rules, issue directives for its members and implement industry standards, she explained.

Mrs. King believes that the central bank should deal with preventing systemic risk, while the SRO can establish a self-regulatory approach in the fintech sector. She warned that regulating cryptocurrencies prematurely could throttle growth and innovation in the industry:

"If laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that this legislation is obsolete or requires updating almost immediately."

Bridget King noted, however, that this approach would have to be balanced against what she called the dangers of delaying the regulatory framework too much.

While mulling over crypto regulations, SARB has been exploring opportunities to implement distributed ledger technologies in electronic payments. It also experiments with replicating interbank clearing and settlement using the Quorum protocol, a permissioned implementation of ethereum.

See more: https://news.bitcoin.com/crypto-self-regulation-deemed-likely-in-south-africa/

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[CryptoBry]

This is actually the best solution so far that may work well with the cryptocurrency platform. With self-regulation, there will be less governmental interventions which can result into something not desired by both sides. With self-regulation, there will be the need for continuous dialogue with many stakeholders and partners and definitely many insights and ideas can easily prosper this way and government will not be stifling the growth of many fintech companies.

[Gotottack]

True enough. Hence, they should not enact laws pertaining to cryptocurrencies first because by the time technology moves farther in the game even more, the laws they have promulgated will be nonsensical already, given the significant changes there are by such time. I think it is better they create an interdependent body first that will be responsible for promulgating rules and regulations as for the time being. Of course, this Body should be under the office of the President or Prime Minister for that matter so there will be proper checks and balances along the way. This way, these two Bodies will help hand in hand to promote what best serves the public without running afoul to what technology can do in the long run.

[audaciousbeing]

Its all cool based on what they are proposing and reading through shows that they know the difference between crypto emerging industry and what the banks are doing. While the central bank is still having issues with managing the excesses of the banks, adding that of crypto to it will make it more difficult and lose focus. So the need to have an alternative body to function based on association rather than regulation.

This approach is what I see as "let's see how it goes" because if crypto industry should be big enough to attract attention, I see the association being collapsed into an arm of the central bank or made to be a full fledged regulatory body answerable to the central bank but if it didn't explode to attract the attention, the group just die a natural death without causing any media rumble.

[Rustamm]

Regulation of the crypto currency is actually a public organization - it is much better than such regulation will be carried out by the state body. However, in the event of a conflict of interests, nothing will prevent the state from repealing any decision of such a public body. Everything depends on the civility of the approach to solving this issue. In any case, the creation of such an organ should be welcomed. Let's see what this body can do.