The cryptocurrency industry is a progressive step and is an opportunity rather than a threat
By Mark Chirnside, CEO & Co-Founder of Xago Technologies.
With the bear market trading in full swing, crypto companies are hamstrung by lower trading volumes and fees earned, which is hurting the bottom line. Finger pointing towards UST, Defi lending and general subpar operations are all leading to regulators rightly taking a stronger stance on the entire industry.
The transformational nature of the cryptocurrency industry is also taking business away from banks, who are predictably nervous about the impact on their bottom lines.
Innovation is what drives humankind. Booking.com is a natural evolution of the hotel/guest house industry just as Uber has revolutionised the taxi industry. We’re perfectly entitled not to be overcharged when it comes to accommodation and transport, just as banks should not be afforded total control over our financial transactions, especially in Africa where international transfer fees are known to be the highest in the word.
This is the perfect time to focus on the importance of regulation of the cryptocurrency industry to enable fairness for all and the Intergovernmental Fintech Working Group (IFWG) recently published a position paper on crypto assets confirming that crypto assets will be brought into the South African regulatory purview.
The pressing issue is understandably money laundering and terrorist financing. The Financial Intelligence Centre (FIC) intends to make cryptocurrency organisations accountable institutions as is required for current banking and financial services sectors. Know Your Customer (KYC); Know Your Business (KYB) and strict Anti-Money Laundering (AML) policies, coupled with the Source of Funds is first on the agenda.
The next issue is that crypto trading enables people to freely transfer money out of the country without any form of exchange control monitoring in place. At present, South Africans only have a single discretionary allowance (SDA) of R1-million per calendar year, so there are strict limits imposed on what we may spend overseas without requesting SARB’s permission.
Xago has been working closely with the regulators on these issues, and has taken an early stance by already putting measures in place to track, trace and limit transactions to what we believe the regulation ultimately will look like, to protect our clients and their customers.
The South African Reserve Bank (SARB) officially sent a guidance note to local banks saying they should provide banking facilities to crypto exchanges. A positive step toward a more inclusive system. The next step is for the SARB to finally get the amendments to the FIC Act passed by parliament, so that banks can embrace the opportunity sooner rather than later.
With regulation, crypto organisations can serve almost 100% of the market, and not just the 5% of fringe players willing to work in an unregulated environment.
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