South African Regulatory Landscape
The South African Regulators collaborate through the Intergovernmental Fintech Working Group (IFWG), who have set up the Regulatory Sandbox to test regulation of innovative products and services. The IFWG Crypto Asset Regulatory Working Group published a consultative position paper on the 14th April 2020, alongside an invitation to register to participate in the 2020 Regulatory Sandbox.
FORUS have applied to roll out the platform as part of the Regulatory Sandbox, and the process will provide assurance that this is done so in full compliance of the current and proposed regulatory framework.
South African regulators have adopted a risk-based, and unified regulatory approach. This combined with a phased approach, where possible, allowing regulatory treatment to be timeously assessed before increased stringent regulatory requirements are imposed.
The approach is technology-neutral and primarily principles-based; the regulatory framework will be based on the specific activity or function performed, rather than the specific entity or the type of technology used. The principle imperative is applied to the activity or function with the support of regulatory rules and standards.
FORUS Regulatory Obligations -South Africa
The recommended policy requires FORUS Digital and The African Wealth Fund to register as an accountable institution with the FIC and the FSCA. The operations of both fall into the category of a crypto asset service provider (CASP).
Once registered, all the relevant provisions of the FIC Act will become applicable. This will mean that FORUS Digital and The African Wealth Fund will be required to adhere to the legislative requirements aimed at AML/CFT. Other obligations will include implementing a Risk Management and Compliance Programme (RMCP), ensuring compliance with the FIC Act.
FORUS will also comply with the FATF Recommendations, which enables traceability for regulatory purposes. The African Wealth Fund will also register with the National Credit Regulator.
The IFWG recommends that the payments technology be tested in the regulatory sandbox, and hence the primary application submitted is to test ZarT Digital Cash for store of value and payment utility.