South Africa Plans to Utilize Stablecoins for Digital Payments

South African national budget for 2024 was recently under review. The review report talked about the need to focus on improving financial management for the public and presented various solutions for this such as structural reforms.

The annual budget of the nation indicates a plan added by the treasury department for improving the usage of digital tokens for payments. The statesmen have talked about blockchain and stablecoins to improve the livelihood of marginalized groups.

Budget Review Report

The budget review report also suggested infrastructure chances and a focus on financial management for the general public. The budget has introduced various viable solutions such as financial management and plans for promoting digital payment. On this account, the National Treasury of the nation also discussed a new policy introduced in the cryptocurrency industry with a focus on stablecoins.

For 2024, the intergovernmental Fintech Working Group retained published new reforms to add stablecoins and specified forms of cryptocurrencies. This group also printed a paper about cryptocurrency regulation in June 2021.

This paper will be amended to add stablecoins as a cryptocurrency asset in addition to running a diagnostic of native stablecoins created and operated within the national jurisdiction.

Fintech Working Group Analyzes Stablecoins as Crypto Assets

The group noted in the report that a considerable amount of analytical work is required to apply various use cases of stablecoins and to recommend an appropriate policy that has a regulatory response.

Meanwhile, legislators in South Africa are also working on adding amendments to the Financial Intelligence Center Act. This policy change will require all firms to submit the details about any cryptocurrency transaction above 49,999 ran or $2,650. At the same time, the South African government is set to study the impact of blockchain tokenization on local financial markets.

For 2024, the Fintect Working Group is set to publish a paper before year-end. This paper is going to take an overview of the regulatory and policy impact of tokenization and blockchain-based on financial markets design and operations.

The government has also announced a three-year program to collaborate with the State Secretariat for Economic Affairs and FinMark Trust of Switzerland to perform 4 digital payment pilot projects.

The 4 pilot projects are inclusive of digitalization of local communities, digitizing low-income wages, remittance, and overseas trades. The main objective of this initiative is to assist small and unregistered businesses adopt payment digitization to reduce operating costs and improve output.

Meanwhile, the nation is also lending a helping hand to farmers in East Africa using blockchain to enable international market access for natives.

Blockchain Firms in South Africa to Face Regulatory Troubles

An article published by Techinafrica in December has shed light on the sizable expansion of various crypto firms in 2023. The article listed major firms such as Stitch and Paycorp that have introduced cryptocurrency payment services in the region.

Stitch allows consumers to make direct withdrawals or deposits in cryptocurrencies.  Another noteworthy firm called The Open Platform (TOP) is a Dubai-based investment firm that debuted a new wallet project on an international scale with third-party Telegram bot facilities.

On the other hand, Paycorp is another firm based in South Africa that launched CryptoExpress an application that users can leverage to make crypto to rand transactions. The service is available at 3000 ATMs nationwide.

Local firms have enabled crypto payment options in the form of Bitcoin, Ethereum, USDC, and USDT.  Commenting on the matter, the Financial Sector Conduct Authority (FSCA) noted that the agency finalized 36 licensing applications.

However, the officials have reported that the agency received a total of 128 licensing applications in November 2023 from local blockchain firms. The regulators have noticed that only 10% of all crypto operators in the nation hail from foreign territories.

FSCA has mandated all foreign firms to establish a local office in the nation to qualify for an FSP license. It is important to note that the South African crypto sector recorded a monthly trading volume ATH  in November 2022 crossing over 8 billion rand or $427 million.