South Africa wants to bring order to its nascent cryptocurrency industry in the first quarter of 2020 in a bid to deter users from evading currency controls.
The South African Reserve Bank (SARB) said the upcoming rules will primarily put a restriction on the amount of South African rand that can be allowed to be sent outside the country by both individuals and companies.
As local business-focused publication Business Report reported , SARB's deputy governor, Kuben Naidoo, said that the new rules will be implemented in the first quarter of 2020, following a five-year-long series of consultations on the matter.
South Africa has limitations on how much money individuals and companies can send outside the country. By currency controls, Sarb would be implementing restrictions on how much local currency can be sent outside the country.
Currently, the central bank allows its citizens to send 1 million rands ($68,200) across the border without any declaration, while for foreign investment purposes, the limit is set to 10 million rand ($681,800), but permission from the South African Revenue Service is needed for this.
Due to these restrictions, many are utilizing cryptocurrencies to transfers funds from South Africa to foreign countries.
While the country's central bank is set to release new crypto regulations, it appears that there is an ongoing crackdown on the virtual currency sector. One of South Africa's biggest banks, the First National Bank (FNB) shut down banking accounts of firms of crypto firms.
According to the bank, the action was necessary citing the risky nature of digital currencies, coupled with the absence of robust regulatory laws for cryptocurrency in the country.
SA Crypto, the country's largest blockchain community, was one of the groups that expressed concern. It urged the regulator not to be too conservative with crypto as it could see South Africa miss out on great opportunities.
In statement, the group said, "The implications of the Sarb clamping down on cryptocurrency use for the purpose of stricter capital controls are far-reaching and alarming."
The group also pointed to the great opportunities in crypto, stating:
"With a market cap of $210 billion (R3.07 trillion) in the cryptocurrency market alone, the industry is driving significant economic growth in countries adopting such progressive regulation, due to the investment many blockchain and crypto asset companies are attracting worldwide."