Monday, May 29, 2023

From January 1st 2025, special rules will start to be in place for using cryptocurrencies and other digital tokens. But the South African central bank still need to work out how safe it is to use these things.

South African Reserve Bank Adopts New Rules for Tokenized Deposits and Crypto Assets on January 1, 2025

Gerhard van Deventer, a financial analyst at the South African Reserve Bank (SARB), announced that new rules about tokenized deposits and crypto assets will be in effect come January 1, 2025. This step is seen as very important but Deventer did caution regulators to watch out for risks associated with digital asset technology.

The South African Reserve Bank (SARB) and its partners wanted to figure out what could happen if they used distributed ledger technology (DLT). So, they tried some experiments called Project Khokha and Project Khokha 2. These were done with the help of commercial banks.

The South African Reserve Bank (SARB) conducted an experiment to explore the concept of a digital currency. This type of currency is called Central Bank Digital Currency (CBDC) and it has a general-purpose, meaning it can be used for retail shopping. The SARB also looked into related areas like Wholesale and Multi CBDCs. Lastly, according to Deventer, SARB are now interested in trying to make this type of currency available to people.

The South African Reserve Bank (SARB) recently finished a project where they looked into if it would be a good idea to have a type of digital money available for buying things. They are now doing another project to figure out what the next steps should be.

In South Africa, the government and the financial industry need to do more on how to handle digital currencies. The organizations that are responsible for this are the SARB (South African Reserve Bank) and FSCA (Financial Sector Conduct Authority).

Standard Bank CE Calls for Answers on Digital Currency Use to Prevent Financial Crimes

The chief executive (CE) of Standard Bank, Sim Tshabalala, recently shared his thoughts on the use of digital money. He said that using this type of money can make it easier for people to bank securely and help them join the formal banking system. It also stops people from being able to cheat on taxes or do any other kinds of financial crimes.

Tshabalala noted there are some unanswered questions about what central banks need to do if people start using CBDCs commonly. He said:

“We don’t know yet how retail CBDC balances kept in commercial banks compare to other types of deposits, or if an individual or business holds their balance with the central bank, will it be like it was a regular banking institution?”

The head of Standard Bank said if we don’t address this issue, it’s like we’re not doing anything to stop the risks and bad decisions that can happen when a bank is involved with finances.

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