South Africa’s Reserve Bank (SARB) alongside the country’s National Treasury has been discussing the possible implementation of new measures for the National Payment System (NPS) with cryptocurrency as one option.
The National Payment System is regarded by South Africa as “one of the pillars of financial stability of the economic system” and the SARB “oversees the safety and soundness of the system and implements risk-reduction measures in the payment system to reduce systemic risk. The Reserve Bank provides an inter-bank settlement service via the real-time electronic settlement system – the South African Multiple Option Settlement (SAMOS) system.
This system first adopted in 1998 is now regarded as outmoded by legislators and in need of updating and have asked interested parties to put forward ideas as to how the bill can now be modified in line with some of the new technologies becoming available. Consequently, digital technologies including DLT have fallen under the legislators’ microscope.
South Africa is currently one of the continent’s made advocates of digital technologies particularly in its advancement of blockchain and cryptocurrency. SARB has already trialed a multi-bank testing of bank-to-bank transfers using blockchain testing the Ethereum based platform Quorum in collaboration with eight banks including, Absa, Capitec, Discovery, Investec, FirstRand, Nedbank, and Standard Bank.
Earlier this year SARB also proposed the launching of Project Khoka to examine the use of Distributed Ledger Technology (DLT) as a method for processing secure payments using Quorum, an Ethereum blockchain-based system.
This new proposal by SARB illustrates the state’s determination to meld blockchain technology into the fabric of the country’s financial system and bring digital technology into the forefront of revolutionizing current payment systems in South Africa.
Regulators alongside SARB and the National Treasury will examine responses before making the necessary legislative proposals for changing current systems post-February 2019.
With increased levels of investment in South Africa becoming public knowledge the tax office is also making changes to its own legislation to allow for cryptocurrency. South Africa Revenue Service (SARS) commissioner Mark Kingon has said that the government department is investigating alternative methods to find and identify investors who may be avoiding taxes.
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