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New Regulatory Changes Reshape Cryptocurrency Transactions in South Africa

Published November 21, 2024
3 months ago

The landscape of cryptocurrency transactions in South Africa is set to undergo significant changes as the Financial Intelligence Centre (FIC) has recently issued Directive 9. This new regulation mandates that all crypto platforms operating within the nation adhere to stringent identification protocols for both parties involved in a transaction. This move is aimed at removing South Africa from the Financial Action Task Force's (FATF) greylist, which has been a priority for national financial authorities.





The directive aligns with the FATF’s travel rule, which necessitates the transmission of comprehensive transactional information alongside virtual asset transfers to prevent illegal activities such as money laundering, terrorist financing, and the proliferation of financing weapons of mass destruction. Crypto Asset Service Providers (CASPs), both domestic and international, will now be required to collect and retain details like full names, ID or passport numbers, addresses, and more depending on the transaction size.


For transactions below R5,000 (approximately $270), only the basic details such as full names and crypto wallet addresses are necessary. However, for amounts exceeding this threshold, the information required grows substantially, including more detailed personal or business information.


The implementation of these changes is scheduled for April 30, 2025, giving CASPs ample time to adjust their operational frameworks to comply with the new rules. The directive underscores the necessity of these measures by requiring that the data collected be made accessible to the regulatory authorities upon request, ensuring transparency and accountability in crypto transactions.


Stakeholders within the financial technology sector have had mixed reactions to the directive. Sean Sanders, CEO of Altify, expressed support for the regulation’s objectives but highlighted concerns regarding the low transaction threshold for reporting, which he claims could increase operational costs and potentially degrade customer experience due to slower processing times.


The decision to set the threshold at R5,000, much lower than comparable figures in other jurisdictions such as Japan, Singapore, and Canada, which have higher limits, has sparked a debate about the balance between regulatory compliance and operational efficiency.


As South Africa strives to enhance its financial security measures, the crypto industry will need to navigate through these impending regulations, ensuring compliance while maintaining service quality. The broader goal remains clear: to fortify the financial system against illicit activities while fostering a secure environment for the burgeoning crypto market.


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