The South African Reserve Bank (Sarb) is setting up a unit to monitor cryptocurrency and fintech developments. The very first goal will be to set up a proof of concept (PoC) for DLT-based interbank clearing and settlement.
Bridget King, the central bank’s banking practice director, consider that cryptocurrencies went beyond traditional banking money transferring and payment services. Currently, the self-regulatory organisation (SRO) will have the power to publish its own rules, directives and industry standards. the new unit will most likely be tasked with establishing a self-regulatory approach to cryptocurrencies and other related fintech developments. It supposes to be would be a non-governmental body.
“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry,” she said. “In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology,” said King about new SRO.
To explore the feasibility of a DLT-based system for processing secure electronic payments will be responsible a unit called Project Khoka.
“The aim of this project is to gain a practical understanding of DLTs through the development of a PoC in collaboration with the banking industry. The objective of the POC is to replicate interbank clearing and settlement on a DLT which will allow the Sarb and industry to jointly assess the potential benefits and risks of DLTs,” stated the Sarb.
Issues on regulating private cryptocurrencies appeared in January this year and newly created Project Khoka has to solve it.