As South African financial authorities dawdle in the establishment and enforcement of national policies favorable to the acquisition, trading, and management of virtual currencies, cryptocurrency exchanges in the country are starting to look internationally for greener pastures in search of areas with more resolute, propitious legislation.
Cryptocurrency exchanges and financial establishments in South Africa are lamenting the insouciance of the financial authorities of the country as regards making policies and definite legislation backing and regulating financial activities involving virtual currencies in the country.
South African Crypto Business search for greener pastures
This attitude from the government has been regressive towards Cryptocurrency firms in the country and this has, in turn, created distrust in the minds of potential users and investors especially when dealing with exchanges within the country.
Sean Sanders, the CEO of Revix, a Crypto investment management firm, spoke to Bloomberg about the apparent indifference on the part of the South African authorities, citing it as the sole probable reason for the consideration of migration from the country; a potential move by several exchanges.
The fintech expert noted the following:
“In an unregulated environment, a customer arrives at our platform with skepticism and rightfully so.”
This is coming amidst the wailings caused by the crypto scam perpetrated by Mirror Trading International (MTI) in South Africa. According to the recently released 2021 Crypto Crime Report by Chainalysis, the platform robbed investors of a total of 23,000 Bitcoin (currently worth over $1.2 billion) making it one of the biggest crypto scams recorded in the country.
It is unsurprising at this point that potential investors would be skeptical about trusting exchanges with virtual assets when there is no definite regulation backing the trading of cryptocurrencies, and ensuring financial security to these investors. Additionally, the fact that South Africa has a history of Ponzi Schemes is just another nail in the coffin on the progress of these Exchanges in the country.
According to Brandon Topham, the head of enforcement at the Finance Sector Conduct Authority of South Africa, South Africa’s regulators prioritize better protection for consumers rather than businesses. Firm and decisive legislation capable of holding exchanges and financial institutions accountable would go a long way in ensuring that. Brandon Topham also noted that further proposals would be considered in the next few months.
Sean Sanders mentioned that the lack of regulation has impeded the growth of Crypto firms in South Africa owing to the fact that they find it difficult to market on popular Social Media platforms like Twitter and Facebook. In addition to this setback, the absence of regulation has also made the operation of bank accounts difficult for Crypto firms, said Marius Reitz, General Manager for Africa at Luno.
Africans remain enthusiastic about Cryptocurrencies
The country, though nonchalant in ensuring proper regulations, are a tad ahead of most other African countries like Nigeria which has, in a press release by its apex bank in the past, declared crypto trading illegal.
In spite of all this, crypto trading volumes in Africa continue to grow at a rapidly increasing rate, with cryptocurrency transfers in Africa at over $316 million as of June 2020 after monthly transfer shot up at about 55% with South Africa, Kenya, and Nigeria accounting for most of these activities.