The popularity of cryptocurrencies continues to rise in South Africa, which is driving new regulations imposed by the country’s central bank. Many residences are concerned over the volatility that has been experienced by owning the sovereign currency, the South African Rand, which has seen a 17% range so far in 2019. According to reports, cryptocurrencies have become widespread in South Africa, with nearly 11% of the residents owning some form of cryptocurrency. Another issue for South African residence is their trading partners throughout Africa. There 15 countries that are part of the South African Development community making the exchange of cryptocurrencies very popular, especially for cross boarder payments.
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Volume is Picking Up
There have been reports that cryptocurrency volume is on the rise. A major South African crypto exchange called Luno saw an average daily trading volume exceeding 80 million South African rand in August. Luno saw a significant surge of new customers, reaching a milestone of three million wallets across 40 countries on its platform.
The most common way South Africans exchange cryptocurrencies are through digital wallets. This allows you to hold your cryptocurrencies with an address that needs to be confirmed if you plan to exchange your cryptocurrency for a good or service. Any alternative to trading cryptocurrencies using a digital wallet, you can learn how to trade cryptocurrencies using a contracts for differences platform.
Regulation is Picking Up
The central bank in South African, known as the South African Reserve Bank is expected to impose new regulations for the use of digital currencies. The new regulation is the central banks attempt to deter users from evading currency controls. According to SARB’s deputy governor, Kuben Naidoo, the new rules will be implemented in the first quarter of 2020.
Regulation for Facebooks Libra
Reports are that several congressmen are looking to classify stable coins as securities. A stable coin is a digital coin that does not change in value. Facebook’s Libra is looking to generate a digital coin that is backed with a basket of national currencies, instead of a signal fiat currency.
US lawmakers sponsoring the bill that would define stable coins as securities to protect US consumers. If passed, into law a stable coin such as Libra will potentially fall under the purview of stringent US securities regulations. Facebook maintains that its digital stable coin, Libra is a commodity and not a security. This would require regulation by the Commodity Futures Trading Commission as opposed to the Securities and Exchange Commission.
Consumer Protection is at the Heart of Lawmaker Concerns
Consumer protection concerns are the driving force behind the movement to put stable coins under the security token paradigm. However, such a move increases the regulatory burden on stable coins, as U.S. securities laws contain a deluge of reporting and compliance requirements.
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