South African Reserve Bank (SARB), the country’s central bank, is laying the framework for regulating cryptocurrency by establishing a special unit to monitor developments in the space.
The unit’s first task, according to a Finextra report, is to set up a proof of concept (PoC) for DLT-based interbank clearing and settlement.
The move comes after a huge scam unfolded with bitcoin company BTC in March, in which many among the 27,500-people affected were South Africans.
The purpose of the unit is not to construct regulations around cryptocurrency just yet. The unit will observe and study trends and developments in the cryptocurrency that can be used in setting up future regulations.
SARB’s banking practice director, Bridget King, told Finextra:
Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.
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