It seems that South Africa has decided that the transfer of locally bought crypto to overseas exchanges will become the subject of the country’s exchange control regulations. This means that all transactions in which an individual buys crypto assets in South Africa but uses them in order to externalize “any right to capital” will become a criminal offense.
This is mentioned in the recently published FAQ document of the Intergovernmental Fintech Working Group (IFWG), a body made out of financial regulators.
The document mentions: “Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is, without permission from the National Treasury, directly or indirectly exported from South Africa.”
It is also mentioned that those who don’t follow this could receive a penalty of $17,500 (250,000 rand) and even up to five years in prison.
Marius Reitz, Luno‘s GM for Africa, declared that while the company “is supportive of clear and market-conducive regulations for the crypto industry,” as of now, it isn’t clear “how this [new regulation] will be implemented and regulated.”
He also added: “A phased approach to implementing regulation for the crypto industry in South Africa — beginning with mandatory AML/KYC obligations — is a sensible approach which will assist in mitigating any potential negative implications of regulation.”