This week, the South African Reserve Bank asked for public comment on a policy paper outlining the perceived risks and benefits of cryptocurrencies and proposed regulatory approaches to them.

In 2014, the National Treasury warned about the risks of using cryptocurrencies (referred to in the paper as “crypto assets”) for transacting or investing. It noted that no specific legislation or regulation existed for their use, and there was therefore no legal protection or recourse for users or investors.

The Reserve Bank, through the National Payment System Department, issued a position paper on crypto assets in the same year, highlighting the risks surrounding them, such as money laundering and the financing of terrorism.

In the absence of a legal and regulatory framework for South Africa, the acceptance of cryptocurrencies for the payment of goods and services is at the discretion of consumers and merchants.

The latest policy paper notes that the financial system is highly regulated to ensure that it is sound and safe, but cryptocurrencies do not have similar safety mechanisms.