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  • A sneak-peek at the future of crypto asset regulation in SA [Opinion]

    Last month the Intergovernmental Fintech Working Group (IFWG) has released its long-awaited position paper on Crypto assets (the Position paper) following the initial consultation paper published in 2019 (see this story).

    The IFWG was established in 2018 and is made up of regulators representing different South African regulatory regimes, from financial services and banking regulators such as the Financial Sector Conduct Authority (FSCA) and the SA Reserve Bank, to the SA Revenue Service as the regulator of taxation regulation.

    The IFWG’s initial exploration of the South African crypto asset market culminated in the 2019 consultation paper (opens as a PDF) which provided an overview of the regulatory and market risks and benefits associated with the emerging crypto assets industry.

    The SA government’s IFWG has released a Position paper on crypto assets market. Here are  some of the most pertinent recommendations

    The Position paper (opens as a PDF) published last month builds on the observations set out in the Consultation paper, and has provided the industry with an outline of the potential regulatory framework for the SA crypto assets industry.

    The Position paper suggests that crypto assets be accommodated within the existing South African regulatory framework, whilst ensuring that sufficient safeguards be implemented.

    The Position paper proposes 30 recommendations to address the key operational, market and consumer risks identified by the regulators as well as to enable South Africa to participate safely in the global crypto assets market.

    We set out some of the most pertinent recommendations below.

    1. The regulation of crypto asset service providers. The focus of the Position paper is not on the regulation of crypto assets themselves but rather on the regulation of services rendered regarding crypto assets and the regulation of crypto asset service providers. To this end, the Position paper provides a list of specifically identified crypto asset service providers, including trading platforms, the buying and selling of crypto assets, crypto asset fund providers and wallet providers.
    2. Crypto asset service providers will be required to register as “accountable institutions” under the Financial Intelligence Centre Act, 2001 (Fica). The provisions of Fica, as South Africa’s primary anti-money laundering regulatory framework will become applicable to crypto asset service providers, as a result of South Africa’s obligation to adhere to FATF Recommendation 15 which now requires crypto asset service providers to be subjected to formal anti-money laundering (AML) regulation. In accordance with Fica, crypto asset service providers will be required to “KYC” their customer using a process that best aligns to the risks of the particular crypto asset service providers. However, there remains uncertainty, both nationally and internationally, as to how AML risk should be identified and assessed in the crypto asset industry.
    3. Crypto assets remain without legal tender status and will not be recognised as e-money. However, crypto assets may be used as a medium of exchange where merchants choose to accept crypto assets as a payment method.
    4. The FSCA should become the responsible authority for the regulation of services related to buying and selling of crypto assets. Crypto assets may take many forms including that of an investment instrument, a digital representation of a consumer service, or utility distributed through a blockchain. However, due the wide definition of “crypto assets” provided in the Policy Paper, regardless of the type or purpose of the crypto asset, it will subject to financial service regulation.

    The Position paper is welcomed as it provides greater certainty than the Consultation paper around the risks of crypto assets and the regulatory regime which is best suited to house them.

    Notably, however, the Position paper fails to propose recommendations around data protection. It is most unfortunate, as the digital environment in which crypto asset service providers operate have the potential to inflict some serious infringement to a person’s or an organisation’s privacy rights.

    In addition, although cybercrime is mentioned as a threat to crypto asset trading platforms, and the Position paper states that crypto asset service providers should ensure that they meet the international cybersecurity standards for the safeguarding of crypto assets, the Position paper arguably does not go far enough to protect against the growing cybercrime threat which is so prevalent in this Fourth Industrial Revolution.

    Read more: SA’s Intergovernmental Fintech Working Group releases position paper on crypto assets
    Read more:
     SA’s Intergovernmental Fintech Working Group launches innovation hub
    Read more: SARB calls on the public to comment on consultation paper on crypto assets

    *Seshree Govender is a specialist attorney at Webber Wentzel. Cindy Liebowitz and Fatima Ismail also from Webber Wentzel, also helped compile this article.

    Featured image: MichaelWuensch via Pixabay

    The post A sneak-peek at the future of crypto asset regulation in SA [Opinion] appeared first on Ventureburn.

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  • African regulators are holding back growth of cryptocurrency on continent, finds report

    While the rapid adoption of cryptocurrencies may be likely in Africa — given the continent’s high inflation rates, volatile currencies and underdeveloped banking — regulators are holding back its growth, a new report has found.

    The State of Crypto: Africa report, released last week by SA founded cryptocurrency platform Luno in conjunction with Norwegian research organisation Arcane Research, reveals that the legality of Bitcoin and other crypto assets varies significantly across the region, with over 60% of African governments yet to clarify their position.

    “While some nations maintain a positive stance, multiple counties have issued complete or partial bans. For whatever reason, North African countries have taken the most hostile position (see the below screengrab of a graphic from the report),” the report’s authors said.

    The most common stance of African regulators towards cryptocurrrency is that of caution, a new report has found

    Algeria, Libya, and Morocco have all issued bans against the use of cryptocurrencies, while Egypt’s religious legislator has passed a decree, prohibiting their usage.

    Screengrab from https://static1.squarespace.com/static/5df0fdb6a73a4b1d59c74702/t/5ec7ad559bcd1c641938615d/1590144351147/The+State+of+Crypto+-+Africa.pdf

    The report’s authors said the most common position, however, is one of caution.

    It said countries such as Kenya, Ghana, Lesotho, Swaziland, Uganda, Zambia, and Zimbabwe have advised discretion regarding cryptocurrency usage while not actively banning them.

    Other countries such as Namibia and Burundi, while also not banning usage, have issued bans against trading, citing the lack of consumer protection as the motive.

    “The opacity of cryptocurrencies has so far motivated the majority of decision making among governments. Regulators so far have focused their actions on the effect that cryptocurrencies can have on their citizenry. Volatility, lack of governance, and the proliferation of scams are the most commonly cited motivations,” said the report’s authors.

    The report said the growing, young and mobile-native population on the continent is more likely to adopt a new financial system, and cryptocurrency has a particular role to play servicing the unbanked. But there are obstacles that must be overcome for cryptocurrencies to reach their full potential in Africa.

    “While much of the focus elsewhere has been on investment, speculation and trading, the utility benefits of cryptocurrencies are more needed in Africa than other continents.

    “Cryptocurrencies present solutions to many of the financial challenges in Africa. The current context is ideal for an alternative money system to take root,” said Marius Reitz, General Manager for Africa at Luno.

    Featured image: MichaelWuensch via Pixabay

    The post African regulators are holding back growth of cryptocurrency on continent, finds report appeared first on Ventureburn.

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  • Covid-19 and African tech startups roundup [22/04/2020]

    A host of sector-specific funding options have been launched in South Africa. Law firms, advertising agencies and restaurants can all get financial support from new instruments launched this week.

    This, while the CEOs of French Tech Cape Town and Johannesburg communities have agreed to provide a combined 400 hours of dedicated mentorship to help entrepreneurs face the challenges of the Covid-19 pandemic.

    Those with any news releases relating to Covid-19 and Africa’s tech startup sector can send these to editor@memeburn.com.

    With the coronavirus (Covid-19) headlining news all over the world, Ventureburn has launched a regular daily roundup on the virus and how it is affecting Africa’s tech startup sector.

    Law firms, advertising agencies and restaurants in SA will benefit from new specialised financial support offerings

    Here then is the latest on the coronavirus and African tech startups:

    Advertising fund launched: SA outdoor advertising solutions company Tractor has launched an advertising fund to offer support to South Africa’s small businesses most severely affected by the Covid-19 crisis, Bizcommunity reported in an article yesterday. The fund consists of R5-million in media value to assist businesses in promoting themselves during these difficult times.

    Fintech offers restaurants finance: SA fintech lender Merchant Capital announced yesterday that it had launched a special short-term finance product to offer restaurants working capital to help ease the economic impact of the national lockdown regulations, Business Report said in an article yesterday. The product, Re-Boot, would allow successful applicants to for example buy stock, pay wages and boost deliveries, among other things.

    R300m for law firms: SA specialist financier Taurus Capital has created an alternative funding solution for South African law firms, announcing earlier this week that it has built a R300-million capital pool which is exclusively available to the legal fraternity. Taurus Capital CEO Elad Smadja (pictured above) said the financiers solutions are tailored to each firm’s needs, with facilities ranging from R250 000 to R30-million available to firms ranging in size from boutique to large multi-partner firms.

    French tech offers mentorship: The CEOs of French Tech Cape Town and Johannesburg communities have agreed to provide a combined 400 hours of dedicated mentorship, on issues such as cash-flow management, bridge fundraising, leveraging Covid-19 to digitalise your business and pivoting. The CEOs committed to the initiatives includes Antoine Paillusseau (FinChatBot), Renier Kriel (FSATLABS), Sebastien Lacour (PayGenius), Thomas Pays (Ozow), Romain Diaz (Far Ventures) and Christophe Viarnaud (AfricArena/Methys). Interested SA founders can sign up to the Coffee Chat platform via frenchtech.coffeechat.co.

    Read more: Covid-19 and African tech startups roundup [21/04/2020]
    Read more: Covid-19 and African tech startups roundup [20/04/2020]
    Read more: Covid-19 and African tech startups roundup [19/04/2020]
    Read more: Covid-19 and African tech startups roundup [18/04/2020]

    Featured image: Taurus Capital CEO Elad Smadja (Supplied)

    The post Covid-19 and African tech startups roundup [22/04/2020] appeared first on Ventureburn.

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  • Covid-19 and African tech startups roundup [25/04/2020]

    The SA government will further ease lockdown regulations from 1 June, President Cyril Ramaphosa said in an address last night.

    This, as former M4JAM (money4jam) co-founder Warren Venter is behind a new platform that is helping needy South Africans to pay for food items with a new digital currency.

    Those with any news releases relating to Covid-19 and Africa’s tech startup sector can send these to editor@memeburn.com.

    With the coronavirus (Covid-19) headlining news all over the world, Ventureburn has launched a regular daily roundup on the virus and how it is affecting Africa’s tech startup sector.

    SA will further ease lockdown regulations from 1 June, President Cyril Ramaphosa announced last night

    Here then is the latest on the coronavirus and African tech startups:

    Further opening of SA economy: The SA government will further ease lockdown regulations from 1 June, SA President Cyril Ramaphosa said in an address last night. All retailers, service businesses and other firms will be able to open. Certain businesses will still be prohibited from operating, including: accommodation and domestic air travel (except for business travel); restaurants, bars and taverns (except for delivery or collection of food); those that host conferences, events, entertainment and sporting activities; and personal care services, including hairdressing and beauty services.

    Almost 1500 firms get R513m: The Department of Small Business Development‘s SMME Debt Relief Financing Scheme on Saturday was due to close applications for its first window of the SMME Debt Relief Financing Scheme, the government’s news agency SAnews reported in an article on Friday (22 May). A total of R513-million in support was approved for 1497 applications (of a total of 14 451 complete applications). The funding will be disbursed via the government’s Small Enterprise Finance Agency (Sefa). The department said it will publish the names of those firms funded during Window-1 on all its websites as of 29 May.

    More small business funding: Applications for the Window-2 of the Department of Small Business Development‘s SMME Debt Relief Financing Scheme, will be available online on https://smmesa.gov.za/ from Wednesday (27 May). The following schemes are available for qualifying entrepreneurs to apply: (a) Small-scale bakeries and confectioneries support scheme; (b) Informal and small-scale clothing and textile support scheme (c) Automotive Aftermarkets Support.

    M4JAM co-founder helping needy: Seychelles headquartered tech platform 6DOT50 is helping needy South Africans to pay for food items, with digital currency called Digital Rands. Former M4JAM (money4jam) co-founder Warren Venter and Alfinanz co-founder Marc Tison are behind the platform, which ordinarily focuses on financial inclusion of unbanked and underbanked customers in emerging markets. South Africans can contribute either by using a bank card on-line or by using cash at major retail store outlets and through thousands of Flash traders. A small transaction fee to cover the retailer fees is charged. Venter says the platform has also made it easy for any spaza shops or informal merchants to register and accept Digital Rands as a contactless payment alternative to cash.

    Read more: Covid-19 and African tech startups roundup [22/04/2020]
    Read more: Covid-19 and African tech startups roundup [21/04/2020]
    Read more: Covid-19 and African tech startups roundup [20/04/2020]
    Read more: Covid-19 and African tech startups roundup [19/04/2020]
    Read more: Covid-19 and African tech startups roundup [18/04/2020]

    Featured image: President Cyril Ramaphosa (GovernmentZA via Flickr)

    The post Covid-19 and African tech startups roundup [25/04/2020] appeared first on Ventureburn.

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  • Standard Bank waives MyMo fees for six months

    Standard Bank has announced that all customers who open a MyMo account between now and June 15 will get certain fees waived over the next six months.

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  • Top startup web events in South Africa, Africa you should know about this week [18/04/2020]

    From today until Thursday (28 May) tune in for presentations from worldwide ecommerce experts at the eCommerce Virtual Summit.

    Among the speakers is Silvertree’s Paul Cook, Zulzi’s Vutlharhi Valoyi and representatives of various large ecommerce companies, such as Shopify and Takealot.

    On Thursday, check out a webinar where e-commerce participants will discuss the opportunities and challenges for fintech in Mauritius post-Covid 19.

    This, while Startup Grind Johannesburg talks to Craig McLeod, who was previously CEO of Grotech Venture Capital fund, on what investment trends startups can expect in a post Covid-19 world.

    Ventureburn has updated its existing weekly series that highlights all the top startup events in Africa, by shifting to focus only on web events broadcast from Africa. This includes webinars as well.

    If you have any event recommendations for us to add to the list, or next week’s, please let us know in the comments below or send us an email. Please notify us by the Friday of the week before the event.

    Not all the events are free and some will require booking in advance. Please click on the event names to find out more information.

    All times below are set in South African time, unless indicated.

    SA eCommerce Virtual Summit

    Tune in for presentations from worldwide ecommerce experts. The event is hosted by the Insaka eCommerce Academy and sponsored by PayFast, uAfrica and Mobicred.

    Date: 25 to 28 May, 10am to 11.30am
    Location: Insaka eCommerce Academy

    Collaborating Against Covid-19

    Heavy Chef has invited three of the leading voices on the collaboration between business and government, namely Business Leadership SA CEO Busi Mavuso, Business Partners’ Jeremy Lang and Retail Capital CEO Karl Westvig.

    Date: 26 May, 6pm to 7.30pm
    Location: Heavy Chef

    Prospects for Africa 2020

    In this virtual discussion, Alexander Forbes invites you to a briefing where our experts will unpack how to manage complexity during these challenging yet exciting times.

    The discussion will feature Butsi Tladi, executive head of Alexander Forbes Consulting; Isaah Mhlanga, chief economist, Alexander Forbes; Lesiba Mothata, ACMA CGMA and Craig Bentley, head of multinational consulting.

    Please RSVP to sheri@corporateimage.co.za to register for this webinar

    Date: 28 May, 10am to 11.30am
    Location: TBC

    Opportunities for fintech in Mauritius

    In this webinar on e-commerce, participants will discuss the opportunities and challenges for FinTech post-Covid in Mauritius.

    The participants will include: Moris.Store founder Suyash Sumaroo, – Founder, Moris.Store, IBL’s Delphine Lagesse, Mycart.mu founder Vishal Anand and Priceguru.mu founder Yannick Ayacanou.

    Date: 28 May, 3pm to 4pm Mauritius time
    Location: Zoho

    Investment trends and Covid

    Startup Grind Johannesburg talks to Craig McLeod on what investment trends startups can expect in a post Covid-19 world. McLeod is the CEO and co-Founder of Get Build, a website builder company. He was previously CEO of Grotech Venture Capital fund.

    Date: 29 May, 1pm
    Location: Startup Grind

    Section 12J training webinar

    Investors, financial advisors and financial professionals are encouraged to join this Section 12J training session presented by Jaltech’s Jonty Sacks. A number of slots will be available over the coming weeks, with the first one to start on 8 May.

    Date: 29 May, 11am to 12pm
    Location: Jaltech

    Lebo Mokgabudi Masterclass

    In this Masterclass fintech, specialist and entrepreneur Lebo Mokgabudi takes you through a step-by-step process for putting together a strategy that is tailored around what’s important to you, whether it’s pursuing executive leadership, becoming a specialist in your field or changing track completely to start your own thing.

    Mokgabudi is the SA Country Manager for BFA Global’s Catalyst Fund.

    Date: 30 May, 10am to 3pm
    Location: Jaltech

    Featured image: Business Leadership SA CEO Busi Mavuso (Twitter

    The post Top startup web events in South Africa, Africa you should know about this week [18/04/2020] appeared first on Ventureburn.

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