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Crypto is not a threat to the monetary system, South Africa IFWG says

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Sat, 18 Apr 2020, 04:52 am UTC

The Intergovernmental Fintech Working Group (IFWG), a South African regulatory body, believed that crypto assets are not a threat to the current monetary system in the country.

The fintech working group published a lengthy paper on April 16 and under the section titled “the risks of crypto assets,” the IFWG insisted that crypto is an unlikely risk to the financial sector. Also, there is nothing crypto could dilute in the South African central bank’s impact on the economy, Cointelegraph reported.

IFWG was formed by the South African Reserve Bank (SARB) to address the risks posed by cryptocurrencies. Its goal is to promote the fintech innovation by supporting the creation of an enabling regulatory environment and reviewing its risks and benefits to adopt a balanced and responsible approach to such innovation.

"The risk of a parallel, fragmented, non-sovereign monetary system: The risk with potentially the widest-ranging implications is the threat to the existing financial system, in which central banks ensure an efficient monetary system through the execution of monetary policy and influence the supply of money or fiat currencies,” the report read.

"Given the current use of crypto assets observed, crypto assets are not seen as posing a systemic risk as yet, and this risk is not probable of materializing in the near future."

Meanwhile, Marius Reitz, GM for Africa at Luno, commented on the position paper and agreed that the regulation in the industry will bring transparency and consistency.

“It provides comfort to banks, professionals and consumers, who will know that licensed crypto asset providers have been through a vetting process,” Reitz said.

“We’ve seen that regulation in the industry can have a very positive impact. Imposing regulations in South Africa (and across the world) will enhance general trust in and stability of the market. It may also result in even more talent and investment capital flowing into the industry, unlocking more business models and bringing more advanced products to market.”

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