How to regulate cryptocurrencies in South Africa

Abstract

The global economy is undergoing radical changes due to the significant proliferation of virtual currencies as well as other crypto assets. The international community is still grappling with this phenomenon and very few countries have started to regulate virtual currencies and related activities. South Africa is among the countries which has not yet drafted regulations to regulate and supervise the use of virtual currencies and related activities. There is however, a need to regulate these activities in South Africa because of the growing interest among consumers to invest and participate in this market, the effect they will have on the country’s financial sector and they present substantial risks to the financial stability of the country.

This paper will have a general discussion about various aspects of virtual currencies and the risks that they present to the economy. It will briefly discuss international approaches to regulating virtual currencies before going into a detailed discussion and comparison on the regulatory approaches adopted by the United States of America and the People’s Republic of China. South regulatory response to virtual currencies and related activities will be discussed and following that discussion a regulatory framework for regulating virtual currencies in South Africa will proposed. The paper will conclude with a summary of what was discussed and a proposal for the way forward.