South Africa should “embrace” the rapid global shift to digitising and tokenising payment systems, and “not watch the opportunities pass it by”, says Dr John Endres, CEO of the Institute of Race Relations (IRR).
“Whatever rules emerge now should make it easier for South Africans to use these new technologies, not harder.”
Endres was responding to the decision by National Treasury and the South African Reserve Bank to rewrite their draft rules on moving crypto assets across South Africa’s borders.
The IRR welcomes the decision, and urges the government to go one step further and scrap exchange controls, too.
In a statement, the IRR notes that, in his Medium-Term Budget Policy Statement, finance minister Enoch Godongwana told Parliament that the thousands of comments received showed the need for “a different approach”, and that a revised draft would be released for public comment.
The IRR was among those who made detailed submissions. In its Submission to the National Treasury regarding the Draft Capital Flow Management Regulations, it argued that the regulations were unconstitutional, economically unwise and should be withdrawn. In its Submission to the South African Reserve Bank regarding the draft Crypto-Asset Manual for cross-border activities, it recommended that the manual be withdrawn and exchange controls repealed.
Endres says: “The sheer volume of comment shows how much South Africans care about this. Treasury and the Reserve Bank were right to listen.
“Whatever rules emerge now should make it easier for South Africans to use these new technologies, not harder. Payment systems around the world are being digitised and tokenised at speed. South Africa should embrace that shift, not watch the opportunities pass it by.”
Endres says the drafts should be judged against the state of the economy.
“Fixed investment in South Africa is below 14% of GDP, roughly half the global average. A country in that position should be making itself more attractive to investors in every way it can. The drafts would have done the opposite, including by barring companies from moving crypto assets across the border at all.
“This is also the moment to revisit exchange controls themselves. The regulations date from 1961, when the apartheid government introduced them to stop capital fleeing the country after Sharpeville. Today their main effect is to deter capital from coming in, because investors fear their money will get stuck here.”
Endres concludes: “The minister’s stated aim of moving away from pre-approvals is a step in the right direction. But the government should not rewrite the rulebook. It should throw it away.”
[Image: by oleksandrsh]