Regulations governing tokenized deposits and cryptoassets in South Africa to come into effect in January 2025 – Africa Bitcoin News

Regulations governing tokenized deposits and crypto-assets are likely to come into effect on January 1, 2025, a senior fintech analyst at the South African central bank has revealed. But according to the analyst, regulators are still trying to understand or learn the risks that come with using distributed ledger technology.

The central bank is considering the appropriateness of retail CBDC

Gerhard van Deventer, a senior fintech analyst at the South African Reserve Bank (SARB) recently revealed that regulations governing so-called tokenized deposits and crypto-assets are expected to come into effect on January 1, 2025. Although this step is seen as an important milestone, Deventer warned however, that regulators still need to understand the risks associated with the technology underlying digital assets.

To achieve this, SARB and its partners have conducted experiments aimed at understanding and identifying the risks as well as the benefits of distributed ledger technology (DLT). Project Khokha and Project Khokha 2 are among the experiments carried out by the South African Central Bank in collaboration with commercial banks.

In one of the experiments, the SARB is said to have explored a central bank digital currency for general use (CBDC). The South African central bank similarly explored wholesale and multi-CBDCs, and according to Deventer, the bank is now interested in finding a way forward.

“At the SARB, we recently completed a project investigating the feasibility, desirability and appropriateness of a retail CBDC for South Africa. We are currently moving forward with an internal project to assess the way forward,” the fintech analyst said.

However, according to a report published in Creamer Media’s Engineering News, South African regulators; The SARB and the Financial Sector Conduct Authority (FSCA) as well as the financial industry still need to do more work on the proper treatment of crypto assets.

Advantages of a digital central bank currency

Meanwhile, the same report also quotes Sim Tshabalala, Chief Executive Officer (CE) of Standard Bank, who recently spoke about the benefits of using CBDCs to facilitate secure settlement between banks. According to Tshabalala, CBDC, especially retail, can potentially increase participation in the formal financial system. They can also reduce the opportunities for tax evasion and other forms of economic crime.

However, Tshabalala noted that questions still remain about the role of central banks if CBDCs become widely used. He said:

“However, it is not clear at this stage how CBDC balances held with commercial banks differ from other deposits, or how CBDC balances held by an individual or firm directly with the central bank differ from the central bank acting as a retail bank. . “

Standard Bank CE said that failing to address this would be tantamount to doing nothing to “reduce the risk and moral hazard” arising from a central bank’s direct participation in the financial system.

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Terence Zimwara

Terence Zimwara is a Zimbabwean award-winning journalist, writer and author. He has written extensively about the economic problems in some African countries, as well as how digital currencies can provide Africans with an escape route.