The Intergovernmental Working Group on Fintechu (IFWG) of South Africa published a document proposing not to grant legal tender status to crypto assets.
According to the policy document published by the IFWG, the growing crypto sector is insufficiently controlled in terms of finances, licensing structure, close monitoring of cash flows and other areas.
"Crypto assets and the various activities associated with this new market can no longer remain outside the regulatory perimeter," the IFWG said.
The IFWG group includes the Central Bank of South Africa, the Financial Sector Control Authority and the Ministry of Finance. Regulators say it is necessary to form "clear regulatory requirements" for the cryptovoltaic sector.
The policy document suggests introducing strict control over the cryptovoltaic industry inside the country. It systemizes FATF anti-money laundering recommendations. According to these recommendations, cryptographic enterprises will have to register with the regulator.
In addition, the cryptovrency sector will face new restrictions on the use of cryptographic assets. For example, the policy calls for a ban on the use of cryptocurrency as a settlement tool in South Africa's financial infrastructure, but proposes to use cryptocurrency assets "for domestic payment purposes" and regulate them accordingly.
"Payments using cryptographic assets during the interim period should be tested in a regulatory sandbox," the IFWG says.
The document also states that the rules for ICOs "should, as far as possible, be consistent" with the securities regulatory schemes adopted in South Africa. Issuers of payment and instrument tokens will also have to submit their White Books to the regulators. The latest IFWG recommendations are open for discussion until May 15.
Late last year, the South African Central Bank said it plans to issue new rules to regulate the crypt currency in order to prevent the use of digital assets to circumvent currency controls.
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