South African Reserve Bank deputy governor recently suggested the institution has changed its position on cryptocurrency and now considers cryptocurrency a financial asset that must be regulated as such. By the end of 2023, the SARB expects to have a cryptocurrency regulatory framework in place.

Kuben Naidoo, deputy governor of the SARB, recently said the institution has recently revised its stance on cryptocurrencies and is now considering introducing a framework to govern crypto-related transactions. Members of SARB’s economic policy committee said such a framework would ensure a safer crypto ecosystem.

According to a report, if such a regulation is implemented, crypto investors in South Africa will be protected. SARB will implement the regulations within 12 to 18 months.

Naidoo, who spoke at PSG Consulting’s webinar, is quoted in the report describing one of the major reasons the central bank changed its mind. He said:

Our view has changed and we now regard (cryptocurrency) as a financial asset, and we hope to regulate it as a financial asset. There has been a lot of money that has flowed in and there is a need to regulate it and bring it into the mainstream.

Nevertheless, the deputy governor said the central bank’s intention is not to pick winners or losers but to ensure that “investors have the best protection and health warnings available.” The use of crypto in money laundering and other illicit activities is a problem that needs to be addressed, hence SARB’s change of opinion.

Naidoo said: “They would have to comply with exchange control laws such as anti-money-laundering and counter financing of terrorism rules. They would also have to comply with exchange contracts rules in the same way that people who trade in any currency and make cross-border transactions are subjected to those laws.”

Naidoo insisted his institution was following the same strategy as its counterparts in Australia, Singapore, and the United Kingdom when asked if the central bank had taken too long to make this decision about cryptocurrency.

 Naidoo added: “We are watching them very closely and I don’t believe that we are behind the curve in virtual currency. Most central banks are focused on two things: regulating the broad crypto environment, and secondly, learning from it to see how it can take on board some of those lessons,”