South Africa is getting ready to impose restrictions on crypto-assets and their propensity for monetary policy evasion, as the country’s government is hoping to enforce its remittance restrictions to cover all available payment methods.
According to a December 2 report by Business Report, Kuben Naidoo, the deputy governor of the South African Reserve Bank (SARB) explain last week to journalists that the new currency restrictions will be put in place in the first quarter of 2020, essentially reducing the amount of money that can be sent outside of the country.
Crypto to Circumvent Transfer Limits
Currently, South Africans are unable to send more than 11 million Rand (about $750,570) outside the country every month. This restriction covers 1 million Rand (about $68,225) without declaration, and 10 million Rand (about $682,285) after getting approval from the South African Revenue Service. Given these restrictions, any South Africans have turned to cryptocurrencies to help them achieve virtually unlimited transfer caps.
With the new measure, financial regulators across the country will be able to nip this “problem” in the bud effectively. The government’s concerns are quite founded. Several sources have confirmed that interest in cryptocurrencies by South Africans has surged in recent times, giving cause to believe that more people from the country are looking at the prospect of holding more of the assets.
— Faisal Khan (@babushka99) October 24, 2019
Last month, popular peer-to-peer (P2P) cryptocurrency trading platform Paxful published a blog post in which it revealed that trading on its platform across South Africa has increased by an astounding 2,800 percent over the same period last year. The country has also been heralding what many people believe will be the crypto revolution in Africa, joining nations like Nigeria and Ghana in championing the adoption of digital currencies across the continent.
Problematic Policies Could Hurt the Economy
However, as opposed to just trading or sending money out of the country to their loved ones abroad, it is possible that many South Africans use cryptocurrencies as a means of saving their wealth. The Rand (official fiat currency of South Africa) has had a bit of a shaky year so far, rising and falling frequently and only being able to hold on to single-digit gains so far. On the flip side, cryptocurrencies have rebounded strongly from the lows of 2018 and are holding steady above water.
In a world where fiat currencies across the world have continued to fall, several South Africans have found their safety in crypto.
Given how important South Africa has become for the growth of cryptocurrencies in Africa, the imposition of such restrictions will bring up a considerable level of outrage. In a statement, SA Crypto, South Africa’s largest blockchain community, explained that imposing restrictions such as these could have far-reaching effects on the South African economy, as such conservative policies will only hinder foreign investment and innovation.
“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,” the blockchain consortium explained.