The South African finance minister wants to prevent pension funds from investing in cryptocurrencies - regulation

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The South African finance minister Enoch Godongwana has submitted suggestions to prevent pension funds from investing in cryptocurrencies and has also set November 12 as a period of public comments.

cryptocurrencies a gray area

according to a test report by business insider Godongwana's time frame for the public for comment on the draft proposals that he wants the changes to come into force before the end of the year.

Before the suggestions of Godongwana, South African pension funds considered cryptocurrencies as a gray area in which an investment of up to 2.5% of the assets held was permitted. As the Business Insider explains, this ambiguous part of the regulations used by pension funds to legally invest in cryptocurrencies is removed as soon as the proposed changes from the minister are approved.

"A [Pension] Fund must not invest in crypto-assets directly or indirectly," explained the report and quoted new rules that in a. Government document .

In the meantime, the Ministry of Finance suggests that Godongwana also tries to expand the definition of cryptocurrencies in order to include derivatives such as non -fungible tokens (NFTS) and all digital assets that are not output by central banks. The report says in Godongwana's proposed definition of cryptocurrencies:

'[C] Rypto-Asset ”A digital presentation that is not issued by a central bank, but can be electronically traded, transferred or saved by natural and legal persons for payment, investment and other usage purposes;

South African regulatory authorities are working to find the right framework

As the report states, Godongwana's determination to prevent pension funds from investing in cryptocurrencies, attributing the South African supervisory authorities try to find the appropriate framework for the control of the blockchain industry. In June 2021, for example, the inter-state fintech working group (IFWG) South Africa released its new position paper, which demands the regulation of the country's cryptocurrency ecosystem.

also Bitcoin.com news in July South African tax authorities had made changes to their online tax return system to target cryptocurrency arbitrage dealers.

Just like other South African supervisory authorities, which have justified their measures against cryptocurrencies with consumer protection considerations, the Godongwana Ministry also uses similar arguments to support the design suggestions. She claims that the proposed changes guarantee protection by limiting the extent in which pension funds can invest in a certain asset or in certain assets.

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