As part of its initiative to promote digital payments, South Africa, in its annual budget, has unveiled the Treasury’s strategy to advance the adoption of digital payments, aiming to improve the well-being of marginalised communities by exploring stablecoins and blockchain technology.
Stablecoins are digital assets whose value is tied to assets like the US dollar. One of the perks associated with stablecoins is its usage as a hedge against inflation, especially in unstable countries.
Outlined in the country’s 2024 budget review, the South African Treasury underlined the importance of structural reforms and boosting public financial management.
“In 2024, the Intergovernmental Fintech Working Group will update its framework to encompass ‘stablecoins’ as a distinct category within the realm of crypto assets.” It said.
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Building upon a crypto regulation paper released in June 2021, the working group will refine its framework to include stablecoins and conduct an assessment of the local stablecoin landscape to inform policy and regulatory decisions.
More on the South Africa development
In addition to that move, potential amendments to the Financial Intelligence Centre (FIC) Act may mandate reporting of crypto transactions exceeding 49,999 South African rand ($2,650), while a study will explore the impact of blockchain-based tokenisation on domestic financial markets.
Anticipated by December 2024, the working group will present findings on “the policy and regulatory ramifications of tokenisation and blockchain-based financial market infrastructure.”
In collaboration with Switzerland’s State Secretariat for Economic Affairs and FinMark Trust, the South African government will implement a three-year program to pilot four digital payment projects. These projects encompass community digitalisation, digitising payments for informal and low-income workers, facilitating cross-border remittances, and supporting cross-border trade to foster innovation in payments and bolster small businesses.
Crypto in South Africa
In recent times, South Africa has been charting a direction out of its approach to crypto.
Recall that in 2023, the country’s financial industry regulator, the Financial Sector Conduct Authority (FSCA) and the Financial Intelligence Centre (FIC) declared crypto to be a financial product and started registering crypto asset service providers. Less than a month ago, an official of the FSCA revealed that he expects the watchdog to make a decision on the fate of 50 crypto companies’ application for licenses, in “the coming weeks.”
Read here:
South Africa’s FSCA to decide fate of 50 prospective crypto companies in a few weeks
Now, the country will add stablecoins as a particular type of crypto. This development, which is seen as a digital disruption, has been exemplified in East Africa where blockchain technology facilitated access to global markets for remote populations.
In July 2023, agric technology companies, Dimitra and One Million Avocados (OMA) collaborated to empower Kenyan avocado farmers with advanced technologies, including blockchain, to enhance production and quality.
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